Hello, everyone. I am Tom McCallum, the Head of Investor Relations for Zoom. Welcome to our Investor Day here at Zoomtopia. The event is hybrid. This is our fourth and first hybrid event. I forgot the controller. You have it. I know you guys are waiting on the safe harbor. Let me start with a few agenda items here. Today, we have a great lineup of executives who are gonna take us through a lot of our strategy, business updates. We have a few IT leaders coming as well. I'm gonna ask you to hold your questions till the end. We have a Q&A session, an executive Q&A session. Please feel free to ask questions then. We'll have mics going around the room. In addition, we are in a quiet period, so we are gonna ask you not to ask questions about the quarter. You can try, but we are not gonna answer them. We will have an earnings call in about two weeks. Feel free to join the earnings call, and we'll give you updates then, as well as that outlook. We will be presenting some non-GAAP financial metrics, so please see the reconciliation of GAAP to non-GAAP metrics in the back of the presentation, which is now available on the website, in the IR section. Also in this section, you will find our safe harbor. We highly recommend that you familiarize yourself with it. We will be making you know some forward-looking statements here today, and you should take a look at the 10-Qs and 10-Ks to see some of the risk factors associated with it. Zoom does have no obligation to update any forward-looking statements we may make on today's presentation. With that, let me bring up Kelly. I got it. I got it. That's right. Well, thank you. That's unique, yes. Thank you, Tom. I knew I had one. Welcome, everybody. It's so great to see so many of you here in person, some of you for the first time. Of course, welcome to those of you joining us virtually as well. Before I dive in, I just wanna say thank you to all of you that have provided us great feedback and input over the last year. Some of that you're going to see reflected in our presentation today. All right. I hope many of you had the opportunity to hear Eric keynote this morning. He shared our amazing platform, innovations for our customers in all sizes, segments, and geographies. The theme is really about enabling them to do more flexible work, to empower authentic connection and deeper collaboration, and to increase equity and inclusion. Our customers love having one platform to connect. This love has driven our growth and success, and we are very proud of what we have accomplished over the last few years. Looking back, we scaled, we built, and we are now evolving again. This has resulted in a strong financial position, our expansive customer base, and our track record of customer innovation and global brand awareness. We currently have over $4 billion in annual revenue with approximately 90% CAGR over the last 4 years. We have over 200,000 enterprise customers, which have doubled over the last 2 years. We've added 1,500 features and enhancements in just the last 12 months. This has all set the foundation for a future that takes us to new dimensions. Zoom is a business that has transformed the world of work as the world has transformed around all of us. While how we work will continue to evolve, we are committed to delivering happiness through innovation, value creation, and our ecosystem expansion. I'm gonna take a minute to talk through each of these. First, our platform. Our platform is built to deliver frictionless and secure productivity and collaboration. This has expanded dramatically and has incorporated the latest technologies to help our customers connect. As we add to the platform, of course, our market opportunity continues to grow, and we are very excited to launch new products like email and calendar, which Eric talked about this morning, as well as Contact Center and Sales IQ, which were launched earlier this year. Second, we are a truly global business, and we're proud of our market penetration and excited about the potential to continue expanding internationally. As our customer base grows and their demands evolve, we are able to support them whether they prefer to buy online, direct, or through a partner. We strive to create value for our customers across many dimensions and in many ways, including growing their revenue, improving their productivity, saving costs, and reducing risks. Our focus on value creation makes us an indispensable partner, and we are excited. In a few minutes, you're gonna get to hear from some of them directly about the value we create for them. Third, our broad ecosystem includes thousands of partnerships across technology, go-to-market, sales, and delivery. According to our partner survey, they have high confidence in Zoom Phone. They see opportunities to enhance their own revenue streams, and they give us a net promoter score of 83. Our developers are also an important part of our ecosystem. They build on our platform, creating offerings that enable our customers to do more within Zoom or embed Zoom within theirs. We currently have approximately 125,000 Zoom apps, and there are over 2,200 integrations in the Zoom App Marketplace. Underlying all of this is our relentless focus on delivering happiness to our customers, our employees, and our community, combined with our core value of care. We focus on our customers' success and regularly incorporate their feedback into our products. We have a strong culture of care that engages and motivates our employees. We have a track record of giving back to the community as we build a sustainable future together. All these growth drivers are contributing to the expansion of our TAM. By 2026, with our current portfolio, we will be addressing a $125 billion TAM. This expansion is happening as corporate leaders look to digital transformation and employees push for more flexible solutions. Estimates of the number of global knowledge workers continue to increase as well. Zoom is very well positioned in this marketplace. We are number one in meetings according to IDC, and we're number three in cloud PBX, but are the fastest-growing of the top three contenders. Our platform expansion also makes us a more indispensable partner for our customers. As you can see here, our multi-product customers at the top represent only 10% of our base, but generate 50% of our ARR. We'll say that again. 10% of our customers generate 50% of our ARR. At the bottom, you can see this large quantity of single product users who already know and love Zoom Meetings and with whom we have built trusted relationships. These customers create an opportunity to move up on this chart with our ever-expanding platform, generating more revenue and retention. Many of our enterprise customers, enamored with Meetings, have discovered the same affinity for Zoom Phone and Zoom Rooms. You can see here with the penetration rate, though, of low double digits%, we still have significant opportunity for growth within our existing install base. We have a diverse customer base that spans the globe and every industry. In the last 12 months, we have seen a strong growing share of business coming from Japan, Canada, and Korea. Of course, this year we have seen some headwinds in Europe due to the war. Thanks to all of you, financial services is our largest customer segment by number of customers in the Global 2000. Our penetration of the Global 2000 has steadily increased year by year as we continue to expand our platform and our go-to-market motions. One of the unique things about Zoom is that we serve enterprises, small businesses, and individuals. We have seen a steady increase in the percentage of our revenue coming from enterprise customers after the accelerated growth of online during the pandemic. We also continue to see a decrease in the percentage of the customers we believe are individuals using their emails as a proxy. All of this highlights that our business is a unique mix of customers of all sizes, locations, and industries, and we are thrilled about the opportunity and diversification this brings us. Another trend we have seen coming out of the pandemic is a return to longer-term contracts. This includes a steady increase in the percentage of revenue, you can see on the left there, coming from annual and multi-year deals, as well as an increase in the average contract length, which you can see here on the right. As many of you know, we have a unique Q1 weighted seasonality caused by the large influx of customers during the Q1 of the pandemic. You can see this has persisted from FY 2022 to FY 2023 due to our practice of co-terminus selling when a customer adds additional products or products or upsells in their contract. We do expect this to level out over time, but as today we see more Q2 and Q4 deals, but this will take us many years to level out. Now, let's look specifically at our enterprise business. We continue to see a steady increase in the number of enterprise customers as well as spend per customer. We also have diversity and different tiers within enterprise. The great news is the fastest growth is coming from our largest customer segment, you can see here on the far right, with customers greater than $1 million of ARR. We currently have over 220 customers in this segment. Now, we're gonna switch to our online business. Here is an update from the infamous slide 14 from last year that many of you loved. As you can see here from the chart on the right, the trend towards lengthening tenures has continued. Approximately 70% of our online customers today have a tenure of 16 months or greater. From the chart on the left, you can see that these longer tenures continue to command much lower churn rates on average. This all is helping to increase stability, bring increasing stability to the online business. I'm just gonna pause here for a moment. This was really the favorite slide of last year. So any questions on this? Yes. You wanna take a picture? Good. Okay, we're very proud of this slide. All right. Okay, continuing in online, looking at our quarterly churn over the last two years, we are happy to report that we are approaching pre-pandemic levels, as you can see here on the far right as compared to the far left over there. In general, we expect stable online average churn rates going forward due to the longer tenure of customers. In just a little bit, you're gonna hear from Wendy about how She will discuss how we're continuing to further attract, grow, and retain these customers. Now, let's take a minute to talk about our operations. We currently have 27 data centers globally and have added 5 new colos since Q3 of last year. As you can see, the percentage of traffic served within our own data centers, which you see on this right-hand chart, has steadily grown over the last year. The fixed costs associated with our colos provides us with operating leverage and uplift to our gross margin. This is in contrast to the variable costs that are associated with the public cloud usage. Going forward, we will continue to maintain some traffic in the cloud to ensure we have continuous and scalable operations, while also enjoying the operating leverage of our own data centers. Okay. As promised, we wanna give you a little more perspective on taxes and their impact on free cash flow, as many of you had questions around this in Q2. This is a new slide. I'm gonna take a few minutes to talk through this. We are in a very unique situation due to the rapid acceleration of our revenues and our long history of profitability at Zoom. During FY 2022, we became a full cash taxpayer as we burned through our NOLs. I want you to look at the far left column under FY 2022 for a minute. During FY 2022, we benefited from the volume of RSUs vesting while the stock price was strong, as well as a high level of employees exercising their options at these higher prices, resulting in significant tax deductions, which created a 1,100 basis points uplift to our free cash flow conversion rate. Okay. That's what you see in that first column. In FY 2023, due to the decrease in the stock price, as well as fewer employees exercising at lower prices, we actually are expecting to see a net burden on our free cash flow conversion of 400 basis points. What this means is that all else being equal, If everything was exactly the same, CapEx, et cetera, year-over-year, the effect of the observed stock price volatility accounts for a 1,500 basis point swing in our free cash flow conversion from FY 2022 to FY 2023. I'm gonna stop here for a minute. There's a lot of numbers on this slide, but this was a really important point that I think many of you wanted clarification around. Any questions on this? I know you love talking about taxes and free cash flow, but. Okay, I'm just gonna say it one more time. All things being equal, the stock volatility alone is driving 1,500 basis point swing from FY 2022 to FY 2023. If everything was exactly the same, we would have seen this impact on our free cash flow conversion, which is what you guys are all seeing now in the results for FY 2023. Okay. Here we go. Our long-term model. This is also something many of you have been asking and waiting for. The last time we provided this update to you was two years ago, and a lot has changed since then. If we start at the top, what you can see on the left is our previous long-term profile and where we are, what we're updating to today. We are still targeting an 80% gross margin as we continue to optimize around our data center strategy that we just discussed. For R&D, we are committed to reaching 10%-12% as R&D is crucial for maintaining our innovative edge. We've talked a lot about our expanding platform, and this is a really important part of our investment strategy going forward. Sales and marketing. We expect sales and marketing to land at around 30% considering the expected mix of our businesses in the future. We know we are under this today, but we've talked a lot about why we expect this to continue to grow, and a lot of this has to do with the ongoing mix of the businesses. In terms of G&A, we take a very thoughtful, some might say, frugal approach to G&A and expect to keep it in the single digits for the long term. Overall, long term, we see our operating margins in the range of 28%-32%, which is a stellar margin in our industry and speaks to the power of our product, our team, and our business model. This model is a framework for what we believe is possible and will aid us as we make decisions on investments and growth. Any questions on this? Yeah. Hey, Kelly, Delia Robertson. Just a quick question on the operating profit line. You talked about kind of some of the moving parts for cash conversion this year, but if we think about it long term, putting aside volatility in the stock price, how should we be thinking about cash conversion from non-GAAP EBIT to free cash flow? Yeah. I mean, what we really are striving for is to get back to a normalized model where free cash flow has a relationship to operating margins, right? That's what we had before the pandemic. I think you said a big caveat, taking out the stock volatility. That has to sort of stabilize or normalize, I would say, and we have to move past that to be able to get back to that relationship. As we move through this or past, I should say, this period of stock volatility, we will give you what we think that relationship is, which is, if you remember, that's exactly how we spoke about it pre-pandemic. We'd love to go back to that as well, make it a lot easier for all of us. Yeah. Ryan with Barclays. Just these updated long-term targets, like, how do you think about where you land on the spectrum given different levels of growth? Yeah, I mean, we are definitely continuing to optimize around growth, and that's why we're gonna especially continue to invest in R&D as well as sales and marketing. I mean, we're in the quiet period, as you all know. We're not giving long-term targets about growth today. We will give FY 2024 guidance on the Q4 call, but we are, as we have always been, continuing to focus on driving growth. Absolutely. There's a question over here somewhere. Okay, great. Okay. Anybody else? All right. As we approach the four-year anniversary of our IPO, a lot has changed for Zoom. Looking forward, we are committed to growing at our new scale, generating robust cash flows, and maintaining disciplined spending to drive profitability. Now let me welcome Graeme Geddes to the stage. Thank you, Kelly. My name is Graeme Geddes. I lead our product acceleration teams for our enterprise business and have the distinct honor and privilege to share a little bit of insights into what we're seeing, some of the customer conversations that we're having. I wanted to start by actually sharing. I have the distinct honor of meeting with probably 12-15 CEOs, CFOs, CIOs every week. There's one question that I get asked more than anything else out there, and it's this: What's the future gonna look like? I'll tell you, I'm no fortune teller. I didn't see that box to be checked when I was applying in my college entrance exams. I did wanna tell a story because this is a story that I tell CEOs, and I think it might resonate. If you look at pre-pandemic, I actually traveled globally quite a bit. For those of you that are global travelers, if you haven't heard of Global Entry, it allows you to bypass the lines. It's kinda part of TSA PreCheck. What that consisted of was I had to take an entire day off of work, drive down to San Diego, sit in line for three hours, do an in-person interview, and I lost an entire day's worth of productivity. You know, the pandemic happened. Obviously, we're not traveling. I didn't realize it, Global Entry expired. Now as things open back up, I said, "Oh, my goodness, I'm gonna have to go through this same painstaking process again," right? I went to reapply to Global Entry, and I saw a virtual option. I was able to sign up, and in a five-minute Zoom meeting, I was able to, you know, get my Global Entry again. The juxtaposition of what I was forced to do prior versus what the experience is now has it really stuck with me. I use that example to share with CEOs because, you know, really the question they're grappling with is, what is the future? Is everything going to go back to the way that it was? What I would share with you is that it absolutely isn't. The level of flexibility that we've gotten, we can't go backwards. It's not just, you know, kind of the term hybrid work. You know, you see here 83% of employees wanting that flexibility. But you see 77% of corporate citizens saying that they want the flexibility in the way that they get government services. You know, it extends even where. I'll share some customer examples, where customers in the retail space are looking for virtual or digitized options, in the way that they consume retail services or even, in the financial services industry with the way that you meet with your customers. These are the conversations we're having. We're helping our customers digitize their businesses, not just with the way that they interact internally, but with the way that they interact with their customers. As Kelly mentioned, you know, it's really this idea of one platform to connect. The platform has grown significantly, and it's really the power of the expansive platform that's really helping us in these conversations. You see, you know, the all-encompassing kind of product wheel here. But what's more important than that is that, you know, Zoom has really kind of surpassed what we've been known for in the past as a video conferencing company. You know, with a rich, you know, suite of collaboration solutions that allow you to, you know, do things like team chat and phone and whiteboard, and it's not just meeting. We can ideate, but it's not just about the actual meeting interaction, it's about what happens before, during, and after that is really important in resonating with our customers. The single biggest differentiator that we bring to bear is not just a collection of independent solutions. Zoom's known for it just works, you know, the simplicity. There's a tremendous amount of thought, time, and effort that our product teams do in how we pull these solutions together, so that they work all collectively, simplistically as one. You know, while there's a lot of times, you know, you might see checkboxes, right? That these services are offered by vendor A or B, right? The devil's in the details of how you pull those together. These are the conversations we're having with customers, absolutely resonating. I'm gonna share a couple of customer examples here in a few, but I wanna show a quick video that highlights how these different technologies come together, and then we'll take it from there. Let's go ahead and roll the video. We saw a lot there. I can't summarize all of that, but what I would say is there are a lot of technologies that are part of the platform illustrated in that video that we actually talked about last Zoomtopia. It's these collection of products and services that are really resonating with our customers. What I wanted to do is share a couple of examples of, you know, not only what this means for Zoom, but what this means for our customers. We'll start with an example, a U.S.-based law firm. You know, this is a customer that was a strong user of Zoom. But very similar to that video, they were struggling with, you know, how do I embrace hybrid work? They had stitched together a solution that consisted of five different vendors that needed in order to tie all of that together. It was difficult for them to administrate. It was difficult for employees to use. You know, part of this engagement we had was, you know, showing them the art of the possible. They were able to, you know, not only displace those five different vendors, so it consisted of, you know, an on-premises Cisco PBX, a digital signage vendor. They had a badging and ticketing system. They had a separate audio bridge conferencing provider. They consolidated that spend, and they embraced our Zoom One Enterprise bundle packaging. You know, it's great because this, you know, resulted in a 5x, you know, fivefold increase in AR for us. I think Kelly showed that in her slide, with customers that having multiple products and services representing a larger portion of our revenues, signing for a 3-year term. The most important thing here is it actually resulted in a net cost savings for them. They simplified things for their employees. They simplified the IT systems for them to support and administrate. They saved money, and it resulted in a five-fold increase for Zoom. Second example, while we're on the topic of law firms, let's just talk about a little bit larger of a law firm. You know, this one happens to be part of the Am Law 100. This is a customer that had no Zoom before. Talking with the CEO, self-proclaimed laggard when it comes to technology. They, you know, very, very much have, you know, antiquated workflows, leveraging fax machines and all of that. They knew that they needed to do something. They were struggling with an aging UC system. They had an aging Avaya PBX on-prem. We were able to help them in the conversation of helping digitize their business, help modernize their stack, with the introduction of Phone, Meetings and Rooms. You know, significant opportunity, it was an opportunity for us to work with a channel partner as well, that provided a tremendous amount of value in their deliberations and kind of their evaluations, as they evaluated both an Avaya private cloud instantiation, a RingCentral ACO offering, and Zoom from a UCaaS perspective. It was a very large opportunity for us, over $1 million ARR, in a five-year term. Next, we have a SaaS-based technology provider based here in the Bay Area. What's interesting about this, they were really just using Meetings before. As you can see here, really kind of jumped all in with the Zoom kind of stack. They were most intrigued with some of our newer technologies. Those being notably Contact Center and our Zoom IQ for Sales conversational analytics capabilities, of which they bought 225 seats. Really, you know, kind of a great example of how some of our newer technologies are actually pulling through the rest of our business as well. You know, this customer, they've rolled out about Zoom One Enterprise to about half of their users, so still a tremendous opportunity for us to go and capture the rest of the business there. Next, we have a large financial services firm. This is a great example, yet again of a customer going from, you know, that single workload, you know, very large user of Zoom, and looking to modernize their stack. Yet again, they were leveraging Avaya from an on-prem perspective, but looking at Zoom Phone and Zoom Rooms, we were able to really help them, you know, think through different ways that they can leverage the technology to really digitize the way that they interact, not just internally, but also looking at future opportunities with things like Contact Center and how they engage with their end customers. Kind of going back to that slide that I had around digitizing some of the financial services types of arrangements. Huge opportunity for Zoom with, you know, over $4 million in ARR signing a five-year term. There's an opportunity to more than double this from here as we look to expand additional global locations. This is an HR and payroll services firm that again moved from Meetings to the rest of the platform here. The part of the story here that I think is really interesting is by the nature of their business, they're actually not a heavy Meetings user. You see, you know, Meetings logo there, but, you know, prior to this, they maybe leveraged, I think it was 10-12 licenses. They're really heavy in telephony, heavy in Contact Center, but they were experiencing significant audio quality issues with their cloud PBX and cloud Contact Center providers that they had. We were able to help demonstrate the power of the Zoom platform and the great audio capabilities as well as video capabilities that we have. You know, providing a lot of value to them. You see here over $750K in ARR signing a 6-year term. Of that, the large overwhelming majority is in both Zoom Phone and Contact Center. We do see tremendous opportunities, not just in instances where people are video first, but where they have a kind of a telephony first approach. Next we have. This is a really interesting use case. This is a leading national kind of apartment leasing provider, where they were really looking at how do we digitize our business, and they're looking to leverage video in interesting ways to do virtual remote tours of their different locations. They were using a cloud provider today, but really looking at how can they embrace video and consolidate that with a single vendor. They're leveraging Zoom Phone, Zoom Meetings, Zoom Team Chat, all in these really interesting workflows that allow them to provide kind of this new way of servicing their end clients. Again, 250K ARR, signing a 6-year term. I think maybe going back to what Kelly was saying about kind of lengthening terms, I think really due to the economic environment that we have, a lot of customers are really looking for that predictability and signing those longer terms. I think between these, I think there were five or six, you know, customer examples that I shared. The common thread that we hear across all of these and really resonating, you know, with you know, CIOs and CEOs, CFOs, you know, number one is really around simplicity. Consolidating, you know, different, you know, technologies that they may have, you know, into a single stack that's fully integrated and works together. The broad reach that Zoom provides from a global perspective. Definitely, this middle one here around time to value. One of the examples that we shared in our last earnings call was a Zoom Phone customer that had purchased in the six figures, so over 100,000 seats. Since then, they've deployed over 60,000 seats to Zoom Phone. I'll tell you know, I've been in the telephony business for a long time, and unheard of, right? That's a 12- to 18-month project before you realize that value historically. To be able to do that in just a couple of months' time is tremendous. The time to value is absolutely resonating. Then really getting down to that business agility, those conversations about how do they digitize their business? How do they provide that level of flexibility? Again, not just internally to their own employees, but how do they provide that level of flexibility in the way that they do their business? Rather than hear me talk more examples, I'd love to share a great example from one of our customers here with another short video. Warner Bros. Discovery is the world's most amazing content company. Our goals as a company are really to be the place where storytellers wanna come to create, bring that to as many consumers as possible. I think finally, the ambition is to really come together as one team and really create the future. The ability to collaborate, particularly for a content company at the scale of WBD, cannot be understated. Our choice of Zoom as a company really comes down to a few key principles. We are trying to create something that is a consumer-grade experience for our employees. We need it to be simple, we need it to be reliable, and we need it to be easy to deploy. Zoom Platform checks the box for all of those ambitions. We rolled out Zoom to Warner Bros. Discovery, and it took around, I think, 3-4 weeks. We actually had Zoom Professional Services help us with that because we wanted to make sure we got the change management piece right. That is one of the biggest benefits is having Zoom as a partner. You're not only getting the solution, you're also getting the assistance to deploy the solution. Desk phones are becoming something that needs to be portable and something you might take home with you or support a flexible work style. I think the evolution and the ease of deployment of Phone has been a real success story for us. Using Zoom Phone, we were able to provide our user base with localized numbers for the games. Our coverage of the games is an intense moment where we've got teams all over the world trying to collaborate around a real-time sport event at scale. They were able to provide us with telephone numbers, and we were immediately able to launch those. Zoom Team Chat is another great example of how it's enhanced our collaboration within the organization. It's allowed our producers and editing teams to work together. Doesn't matter where they are in the world, they can generate a Zoom meeting right in the Team Chat, and it's really been evolving since we've started. We're able to start groups, moderate the channels, share whiteboards, and keep all of our product information in there. It's really expanded the capabilities as to what we can do as a team. We've been able to evolve with Zoom conferencing and particularly the Zoom Rooms experience toward complete self-service for even complex meetings. Zoom in general, it is literally a byword to quality and success. They're constantly innovating, constantly adapting new features and listening to the customers. We're looking forward to using the contact center with Zoom Phone. We're essentially trying to move everything to Zoom Phone as much as possible because it simplifies our integration. I would summarize our relationship with Zoom as one that's, it's built on a track record of success and delivery. We're not standing still. We're not the same shape today that we were yesterday, and we won't be the same shape tomorrow. That ability to continually listen, take feedback, evolve and innovate on the platform is something that I see every day in the way the Zoom team delivers, and one that I'm confident will continue in the future. With that, I'll hand it over to Oded Gal. Thank you, Rob. I know the product keynote went a little bit further, and some of you missed some of the highlights, so it'd be good to kind of go over things that we spoke about today. We'll start with kind of how we think about the different aspects of our roadmap. First of all, really building everything to a single platform, having that single client was kind of a big thing for us in this product keynote. It goes across all of our products from the meeting up to the contact center, building that value of having that single app that you can get all your capabilities in. It's very important in communications and you're about, you know, toggling from one application to another. It's not just about the end user, but even the agent of the contact center is big value, and we spoke about it at the keynote. Really thinking about it in terms of the entire journey, not just, you know, an in-session experience, but across the different products, the workflow application. It relates to some of our integrations that we've built, providing that before, during, and after the meeting, and also relates to applications like the contact center, integrating with the new acquisition from Solvvy, where it starts in the web, it goes to a phone call, then moves to a video. These are kind of the ideas we have around that aspect. Then really extending the value of Zoom with all the integrations and being that platform for communication, and we spoke about it across all the products in terms of integrations, and ServiceNow is a great example where, you know, the COO came on stage and talked about this, strategic partnership we have with them and the different capabilities that we're building in the product. We start with the first one. Email is a good example. You may have missed the keynote, but, I'm really excited about this. This is not something that is specific to one market or the other, or one segment. The integration we have with Gmail and with Microsoft 365, applicable to any user. It provides really the ease of use of having everything in one client. The email integrating with chat, calendar integrating with meetings are the highlights, but there's more to it, and we'll keep investing in making that experience more and more integrated and easy to use. That's kind of the first one is basically a client that is part of your application. The Zoom application, as it is, will have mail and calendar clients. The second is the service, where we're addressing more the small businesses. It will be something that you'll be able to get your own ZMail address, or you can integrate with your own domain, and it provides end-to-end encryption when you send a mail between our service users. This is something that will also have an additional capability, which is the calendar external users booking, where most calendars today are very limited in the sense that allow you to see availability of people inside your organization. What if you wanna schedule with someone outside? This service integrated into our calendar natively will allow that external booking to happen natively in the product. Any questions on Zoom Mail and Calendar? Okay, we continue. Again, the different products that we announced, and we are releasing to market, it is coming in beta this week, so check it out and be sure to update your client to get that experience when it's out. Again, examples of the things that we're doing on the service side. Really a focus on privacy and the ability to support that integrated experience. Zoom Spots. This is someone Kelly knows, my kind of baby. In hearing from customers about this loss of community sense, where people are working from home, maybe there's some percentage of people coming to the office, and there's a disconnect. People, especially the ones who are working from home, they don't feel they're part of a group. They feel they're siloed at home in their, kind of in front of their laptop, and that's how they go through the day. We're missing all of these conversations that used to happen where you could talk about your personal life, your family, and a lot of actually business decisions are made in the corridors. It's all gone. The example I always have is All Hands. You used to come ten minutes to the cafeteria, talk to everyone who came to the All Hands, to the auditorium and exchange greetings, but also talk about work, and that is gone. Today, you have All Hands on Zoom, and it starts in an hour, and that's it. You have some text chat, but that's it. Really, we're excited about this, and it's different from a regular meeting. The way it's different is because it's more fluent. We have all the capabilities in a meeting experience, but meeting is more of a scheduled calendar event where you come in and you kind of interact with others in a very regimented way. Here, this is something that you'll get into this space that we call a spot. You'll be able to see everyone. People will be able to really get into smaller groups and move in and out quickly between the groups as if they're kind of in an open space. We really feel strongly that this is a big problem that people have today, especially with building trust between each other and building a culture of togetherness, feeling that belonging to the company. This will allow that. Any questions on Spots before I continue? Okay. One thing I wanna add about Spots, going back. One of the big assets that we will leverage with Spots is really how it integrates with the actual physical spaces. Meaning, it's not only for individuals on laptops and mobile phones, it's also well integrated into the conference rooms or even an open space. The idea is that you'll be able to roll in a whiteboard, Neat Board with, you know, a camera and a screen and microphone and speaker. We have this amazing feature that allows you to create a border around that device where only people that are close to the device are being heard and will allow people to come in close to that device and start a conversation with the people who are always on the other side. That kind of brings together the people who are in the office and people who are remote in an amazing way, and really a great solution for their hybrid workplace. Okay, moving on. Feel free to ask questions if you have. Sure. I just have one. Okay. Great presentation. Thank you. Is it possible to take some of the brand new feature announcements and maybe help us understand which of these were really being pulled from the customer base? Like which of these had a lot of requests where you know going in that Zoom customers are requesting it from you, right? Versus something that maybe is a little bit more of a push where you know where it's kind of the folks at Zoom seeing an opportunity to create more stickiness around meetings. The way we work in the product team is we actually hear the customers and their requests, but we try to understand the problem. In many cases, the solution can solve multiple problems. The idea is to kind of take multiple requests and understand, okay, what exactly is the problem? Then create a kind of root cause analysis and provide a solution. Let me give you an example. What we're doing in the conference room was part of that. People didn't ask to have multiple streams. They just came to us and said, "Hey, we were all at home during the pandemic. We created this amazing experience with gallery. Everybody was on the same playing field, but now we're concerned that it will be gone when people will be in the office and some people at home, there will be some, you know, discrepancy." We said, "Okay, how do we solve that?" We said, "We can create a technology that makes the same experience, even if people are in the office in the conference room." There was no request for Smart Gallery. We were introduced with a problem, and we provided a solution. That's how we roll. Was there a request for ZMail? Yes. Well, the request was around an integrated experience. Customers were saying, "Hey, I have to toggle between different communication modalities. Can you make it easier for us?" Especially around chat and email, and again, calendar and meetings. Think about it. Why would I go to someone else's calendar if I can go inside the same client and have that integrated experience between my meetings and my calendar? The problem was that lack of fluid experience between your communication modalities, and that's how we solved it. Thank you. I have a question. Some of these features you talked about, some of these products, which are the features will be part of the Zoom Meetings and Zoom One versus the new suites that will be crossing into customers that ask for them? We're still kind of working on that. I don't have a final answer, what exactly Zoom One will include, from this new feature that we provided. Conceptually, the idea is to create more value with Zoom One, so you can imagine that that's the direction we're taking, where you get a suite of products inside a really one package. There's no kind of final decision exactly what will be the price and how it will be packaged. Some will be only for enterprises, some will be for all Zoom One customers, so that's something we are still working on, but we'll update as soon as we get that. Could you talk to any trade-offs you had to make between client thinness and thickness as you're now expanding the capabilities of the app? Does that cause differences across geographies or bandwidth requirements? From a kinda feature fatigue perspective, maybe can you give us any data points around initial testing and kind of what you've seen there relative to original workflows that you're trying to replace? That's a great question. We've always been very strict about making our clients very thin because we have people who just come for a meeting and want to download, join the meeting, and move on. We've built a mechanism where it actually can gradually download additional components. For example, if you have an account or you don't have an account, we differentiate between the two, and you will not download all the capabilities in different situations. We're kind of thinking about it in a smart way. Just quickly, from a user's perspective, as you're evaluating early beta users of the extended client versus what they were doing historically, what type of productivity improvements are you seeing? Well, we get so many great positive responses, especially with our team chat that has been out for a while, on, you know, how they can integrate with the meeting and, you know, spin up a group conversation just with one click. This is one of, kind of the features that we have. Now we're adding the ability to really kind of have that meeting continue with the, that same channel inside that meeting. The reason we've done that is, again, to solve that problem of, okay, you started an ad hoc meeting from a channel. Now, what happens to that channel text that was there, can you extend it into the meeting? That's what we've done. We're making it even more integrated, and we're getting it. We actually have several customers who are waiting for it, and we're asking for it, but in a different way. They're asking, "Hey, I want my continuation of my chat after the meeting, how can you support us?" The solution we have is integrate our team chat that is persistent with our meetings. Meta Marshall, Morgan Stanley. Just a question on Spots. You know, has there been internal usage yet? Because I wanna have a sense of kind of where it's been demoed, because it seems really interesting as a way to bring in hybrid workers, but part of the idea of having your camera on all day kinda seems terrifying. Well, actually, you don't have to. Okay. If you've seen the mode, there is. Yeah. You can do audio only, and you can mute audio and video, but you can still see who is there. It's integrated with our chat channels, so you can, you know, revert to text if you want. Do you have a sense of how usage has been. Like, just anything that kinda says what usage has been like. Yeah. It's early. I can say that. Yeah. I can tell you that, you know, text chat is not solving the problem, right? People want to get a better presence than just a green circle. They want to know that the other person is there, and other tools don't provide that. Okay. Great. Chet Kapoor, Tenzing Global Investors. Do you expect your mail and calendar features to be more popular with online users versus enterprise? We're starting with, you know, individuals and small businesses, yes. Got it. Yeah. We are, you know, in terms of the enterprise, we have the Gmail and Microsoft 365 integration, and that will be something that they will use. Get a similar benefit in terms of the integrated experience. Let's get back to this chat, to the slides. The chat is here. Really building more capabilities in terms of integrations with Team Chat. We spoke about a few examples. ServiceNow is one of them. Asana and others really kind of providing that capability. It's also integrated into the phone users, where you can actually, if you have a queue, you will have a channel associated with a queue, and people can converse between each other. If I picked up someone else's call, I can let them know through that. That, again, the problem of having a queue of agents waiting for a call, how do they connect between each other? Today, they had to use a separate tool. Now it's all integrated in one tool, the channel and the phone application all in one. Zoom Clips is another exciting new product. Really, if you know, meetings are great, real-time, you can make decisions, you can, you know, get everyone together. But what if I live in another time zone, and I want to visually provide content to someone or message or even a product demo? I can easily create it with a single click and then share it easily and get feedback from that person in different times. Asynchronously collaborating with Zoom Clips. I spoke about Smart Gallery. This is the extension to that. If you remember, Smart Gallery provides the ability with a single device to break to different streams, different attendees in a room and send them as separate video streams in a gallery. The problem we've seen, and we heard it from customers, is that in many rooms, especially boardrooms, there's a long table that you cannot really see everyone with a single camera. You need multiple views, and so Intelligent Director allows you to add more cameras, and then the cameras will really display different views of different people in the room. With AI, will choose based on the face angle which video to send from that person. Kind of extending the Smart Gallery to be even more intelligent, if you can say that, really for more like high-end rooms where people will invest in multiple cameras and will provide that capability of seeing everyone in the best view. Moving to our next category, the Virtual Agent. This is based on our Solvvy acquisition. Basically integrated it into our contact center solution. From a packaging but also from product integration, it will be part of that offering. Zoom IQ. I'm not sure if you've seen the product presentation, but there was a lot of details on how it works and the benefits. I think it was well done. You can really get the sense of how important it is for sales teams to get feedback on their sales demos. That's what we're doing here. Now we're adding something even more powerful in the sense that you can offline start a conversation with a virtual coach, and it will tell you how well you're doing without taking time off, you know, someone who's making another sale. Really adding more capabilities to Zoom IQ for Sales. Zoom Mesh. Another great innovation in the sense that if you've ever been in a webinar, even if it's runs internally and the video starts, you know, freezing. Of course, not with Zoom, of course, but in some situations, it happens in the sense that you have a network that cannot really support so many users, especially if they are in the same location. Think of the use case where you have a lot of users coming into the office, but they still want to connect to the old Hangouts from the desk. How do you support that? We also heard from customers who had a lot of small offices distributed across multiple cities, and they don't have the option to deploy a server in each one of those branches. The idea is to automatically create the distribution of the media to allow that high performance by just enabling it in the client itself, and the client is selected to distribute that media automatically. There's nothing for the IT person to configure or set up. It just works, just like any other Zoom capability. The idea is really to provide the ease of use for the IT and the marketing person to create those, you know, high-performance video events without the need for configuring or setting up ahead of time. Next category, the extended value of Zoom. Team Chat, back to, you know, the integration that we're building. You can see our top priorities are Jira, GitHub, ServiceNow, Salesforce, Google Drive, Confluence. We're kind of working on different capabilities that fit mostly organizations with technical teams and also enterprises that use capabilities like Workday and ServiceNow. Marketplace, the monetization of the apps, really important in terms of driving developers to have a win-win. If they build an app, you'll be able to go into the marketplace and buy it, and of course, they will get a cut of that. Then that's also another problem that we addressed, where customers were saying, "Hey, I as an end user have to always ask the admin to get the app for me, and it takes a long time until they approve it. Until I get the app on my desktop application, it's really a bureaucratic process. How can we make it easier?" The idea here is that the admin can actually approve it ahead of time, put it into a list that shows up in the desktop client immediately when someone installs the client without really going through that process. Okay. Thank you, everyone. I'll have Wendy come and continue the presentation. Thanks, Oded. Good morning, everyone. I'm Wendy Bergh, General Manager of our online business. I'm responsible for the company's online revenue and customer experience. Prior to Zoom, I spent over 20 years in leadership roles across enterprise and consumer companies, including ServiceNow, Walmart, and Minted. I'm excited to share with you today an overview of the online business and a view into some of the great work the team's been doing to engage customers and drive growth globally. The online business experienced exponential growth over the past three years, resulting in a three-year CAGR of 179% from fiscal year 2019 to fiscal year 2022, and helping to make Zoom a global brand. Online is focused on creating new value for small businesses and consumers and making it easy for these customers to try, buy, and onboard with Zoom. A foundational piece of our product-led growth model is our free basic offering, which allows customers to host meetings up to 40 minutes for free, giving us the opportunity to upsell them to our more robust paid offerings. Online is also a flywheel for international and enterprise expansion. Online enables a 24/7 storefront that allows us to engage customers globally, helping to expand Zoom's brand and footprint. Once we land accounts online, we use data-driven signals to transition them over to our enterprise business, where they can be expanded significantly. Lastly, the online business is a highly efficient business. Given its reliance on technology and automation at scale, and while we use technology at scale, we also can connect with our users at a more personal and local level using technology as well. The online business is a dedicated and specialized team that is focused on delivering value for SMBs and consumers with speed. By having both the business and the technology teams under one leader and working closely together, we're able to move more quickly and address customer trends as they come up. The online go-to-market team is made up of strategy and planning, e-commerce, marketing retention, and user experience experts. The online technology team is made up of engineering, data science, product growth, and global payments experts. These teams work together to ensure we deliver an optimized end-to-end experience for our customers. There are three core pillars to driving growth at Zoom for the online business. The first pillar is customer acquisition, which is focused on how we market and acquire customers. The primary driver of how we acquire customers for the online business is really around our organic traffic, as audiences hear about our products virally. As customers visit us, they can quickly onboard with our free basic offering that lets any customer quickly and easily host a meeting, start a team chat, or collaborate with a whiteboard. While organic is the primary driver of our traffic and how we acquire customers, we sometimes invest in paid marketing to reach new audiences that may not be aware of Zoom yet. Our second pillar is customer monetization. These are the strategies that we use to drive new revenue. A key lever for us is driving free to paid upgrades, because we have a large free user base. Another key strategy for us is driving upsells and cross-sells for licenses and new products. From an international perspective, we're focused on ensuring and making it easy for customers to pay globally by enabling localized currencies, localized pricing, and localized payments. Lastly, in the circumstance where a customer does try to churn or does churn, we do win-back offers, and so we go back to them and really try to get them back on as a paying customer. The last pillar is customer retention. Actually, in customer retention and in customer monetization, one of the things we do is drive value with new offers and features. From a customer monetization standpoint, that helps drive free-to-paid upgrades and helps drive that differentiation between our free and paid offerings. From a customer retention standpoint, it creates that stickiness and customer loyalty. From customer retention standpoint, we also look at mix shift to annual. We know that our annual customers are more loyal and have higher LTV. We also do save programs, so if somebody does try to churn or leave our platform, we will try to save them with different offers. Lastly, we've been relentlessly focused on reducing churn, specifically involuntary churn, which is when a customer may churn due to a credit card expiring versus a decision that they've made. Now I'm gonna talk about some examples of strategies we've used across those pillars to drive revenue growth. The first one I'm really excited to share is one we executed earlier this year with the goal of creating more differentiation between our free and paid offerings. Our free basic offering has helped people connect around the world and drive exponential growth for Zoom. Historically, as part of the basic free offer, we provided unlimited 40-minute group meetings and unlimited one-on-one meetings for 30 hours. In May, we instituted a 40-minute time limit to those one-on-one meetings for free basic users, so now they're in line with those group meetings. What did that do? Well, I'm pleased to say that it had a really big impact on helping us convert older tenure free base. What you see in this visual is the purple box are free users who upgraded to be paid users, and those free users had a tenure of 18 months or longer. You can see that on May 2 we made this change, and between April and May, that purple box expanded significantly, meaning that we were able to monetize, get more free users that had been with us for 18 months or longer to start paying us, and you can see that purple box has remained relatively high since. Given the success of this initiative, we're doubling down and creating more differentiation between our free and paid offers, and I will cover a few more initiatives later on that focus on this strategy. I mentioned earlier how easy it is for online to sell at global scale leveraging technology and automation. A key focus area for us is enabling localized currencies, localized pricing, and localized payments. So far we've launched localized currencies in 12 countries and localized pricing in 3 countries. For localized pricing, we tested in Vietnam earlier this year to understand if we could drive incrementality with a lower price, and the results were positive. We have since expanded localized pricing to Mexico and Brazil and have other countries lined up to launch in the future. We also are focused on enabling more payment options globally and locally. Today, we have six payment options, and our goal is to expand that number over the coming year. Lastly, we enabled in-app purchases on Android and iOS. This is important because some customers are highly mobile and like to purchase through the App Store, so it allows us to reach new audiences. Given our large user base, we want to be able to reach customers while they're engaged with Zoom. With this in mind, we launched in-product marketing placements that allow us to reach active customers with monetization offers and value add messages. One example of a recent monetization offer we executed is a cross-sell offer to Zoom One Pro business customers to purchase Zoom Phone. A recent value add message we provided was making users aware of an upcoming webinar on how to use team chat effectively. This is a really powerful channel for us to reach and engage with our customers on an ongoing basis. I mentioned earlier, a key goal of ours is to shift contract mix to annual, given annual customers are more loyal and 2x and have 2x LTV of a sub-annual customer. By leading with annual offers first across our marketing channels, we have been able to drive the mix up from 28% in Q2 fiscal year 2021 to 52% in Q2 fiscal year 2023. Earlier, I mentioned that we are focused on creating more differentiation between our free and paid offerings. I'm excited to announce today that we'll be launching later this year Essential Apps as part of our Zoom One, Zoom One Pro, Business and Business Plus plans. Essential Apps provide valuable ways for our customers to run and grow businesses and will be easily accessible on the right side of the client. A few examples of the apps we'll be providing are Sesh, which provides visual agendas to keep meetings on track and increase participation. Twine, Funtivity, and Welo enable new ways to host team meetings and have workshops to increase engagement. Warmly and Gondola, which deliver better ways to sell and support our customers. Really excited about Essential Apps because they will create real value for our SMB customers, helping to drive free-to-paid upgrades, more engagement, and longer retention with Zoom. You heard Oded talk about email and calendar today. I'm really excited about email and calendar 'cause it's also helping us create some differentiation between free and paid. The Zoom Mail and Calendar client beta will be coming soon to free and paid online customers, and the Zoom Mail and Calendar service will be available first to Zoom One Pro business and Business Plus customers in the U.S. and Canada. By only having the service in our Zoom paid offering and not our free offering, we're creating that differentiation. Kelly mentioned this earlier, but I'll spend a little more time on it. A key pillar for us, in the online business, is customer retention, and I'm happy to report that we made great strides in this area over the last few years. Online churn for Q2 this year was at 3.6%, down from a high of 7% two years ago. We've been laser focused on reducing involuntary churn, driving mix shift to annual, adding value with new features, and also optimizing our save offers. We'll continue to double down in these areas to create more customer loyalty and stability in the business. I've talked a lot about how online drives revenue, but it's also a flywheel for enterprise. You know, online is the fastest and easiest way for a customer to engage and get started with Zoom. At a certain point, our direct business can enable a larger upsell for key accounts. Online has transitioned tens of thousands of accounts to the enterprise business, which has resulted on average in a 500% AR expansion of these accounts. To do this, we leverage key product-led growth signals to identify when and which accounts to move over to an account executive. That is it for me today. I'm going to hand it over to Tom, who's gonna tell you what's coming next. Thank you. Thank you, Wendy. Hey, everyone. We did have a little bit of a scheduling challenge, and we are going to just switch up the schedule just a little bit. The customer panel that was meant to be after lunch will now start around 1:30 P.M., and what we're gonna do is gonna have the executive Q&A start at 12:45 P.M. We've got about 20 or so minutes for lunch break. There's lunch served outside here. You can either bring it back in this room if you'd like, or if it's more convenient, you want more space, we also have a room next door where you can spread out a little bit. Enjoy lunch and come on back in about 20 minutes. Thank you very much. He's gonna do an announcement, I think first. Okay. Hey, Eric. I don't know if any of them saw the announcement, email and calendar before. That's okay. Okay. All right, everybody. Thank you. I hope you enjoyed lunch. We are thrilled now to have Q&A, and joining me on the stage, of course, is Eric, our CEO and founder, and Greg Tomb, our president. Here you go. We have mic runners on the side, and we're gonna open it up for Q&A. I'm gonna let. There you go, Rishi. Siti Panigrahi from Mizuho. Oh, sorry. Not Rishi. Sorry, Rishi's over there. Sorry. Oh, go ahead. No, no, Siti, it's you. Please go. All right. It's good to see you, and thanks for hosting here. Eric, we saw so many product announcements today, and in fact, Zoom Phone, one of your fastest-growing products, and Contact Center next. A couple of questions. In terms of Contact Center, do you see similar kind of growth and adoption based on although it's just a year? What other products that you're more excited about near term versus medium term to long term? Yes, great question. Yeah, first of all, so excited to see you all, you know, in person. It's not about Zoom and experience anymore. I think we can shake your hands now. Mm. You are so right. I think Zoom Phone is very important an element, or one of the most important elements for our Zoom One platform, right? You know, we are doing very well on that front. There are two new services. One is the Zoom Contact Center, another one is the Zoom IQ for Sales, you know, based on customer feedback. In particular, Zoom IQ for Sales, almost every one of our customers, they all told us, "Hey, you know, our sales team, they're working remotely. How to help improve their productivity?" I think we do see a lot of new deals in the pipeline for the Zoom IQ for Sales. In terms of Zoom Contact Center, again, this is something new, but actually we are doubling down on that. We have a lot of engineer resources, you know, adding a lot of features every month, every quarter. We have very high confidence as in down the road, it can help us a lot in terms of revenue and also the growth. But, you know, first year always, right? We found new use cases, right, you know, like internal IT support, and also some customers, especially for phone customers. They also, you know, replace their other on-prem contact center solutions. You know, take our, you know, customer experience team, for example. We deployed other cloud-based contact center solution before, and, you know, two months ago, we replaced that with our own contact center solution. It works extremely well and give our sales team more confidence to sell that. Again, I think that'll be the driver, you know, I think, you know, in the next several quarters for both Zoom IQ for Sales and Zoom Contact Center. You want me to add to that? Yes, please. Yeah. The other thing you have to know is that, you know, every single customer we have, whether it's mass market up to the enterprise, has a need for both of those products. It's almost regardless of the industry they're in and where they're at, right? A lot of them have very old contact center type applications. They're unfriendly. They can't manage them. They can't change with the organization. Almost every one of our customers is looking for something else there. When it comes to Zoom IQ for Sales, the value proposition is extremely strong, right? Some of our customers have invested in products like Gong or Chorus. Very easy for us to take that business. A lot of them, though, that are using meetings for the sales force, and most of them do, immediately see that, and they see an, you know, an advantage to using it and a benefit for their sales force. It's been something that's been very easy to take into our existing customer base, which in the enterprise side is fairly large. I mean, it's, I won't give exact numbers, but it's over 200,000 enterprises, right? Also to note, though, we've only released it in a very limited set of languages. I mean, IQ for Sales is English, right? All of a sudden, we've got in the next quarter here, another 10 coming out, so it'll allow us to expand beyond, you know, just English-speaking markets. I think we've got, like we did with Phone, two products here that you're gonna see companies will expand very fast. It's very natural to replace existing, you know, costs they already have, except with us, they get an integrated solution people are used to using 'cause it's, you know, all built with the same pane of glass, same technology. I think they've got a good future for 'em. Yep. Actually, let's call on Rishi this time. All right. Thank you. Rishi Jaluria, RBC. Two questions, if I may. One for the team and maybe one that might be specifically for Kelly. For the team, like if we think about a lot of the platform innovations that you're continuing to come out with, including what you've been announcing today, you talk about wanting to get into CCaaS, and you know, we've learned that's a really hard market to get into. Larger players have tried to flex their way into that and not been very successful doing so. So how do you think about, you know, the amount that you have to spend on engineering, but then still having that longer term target that's significantly lower than what most other software companies would spend? Maybe just as a quick follow-up, Kelly, when we think about the longer term margin profile, how should we be thinking about the role of stock comp and your philosophy around SBC and dilution as it fits into that? Thank you. You wanna talk about the engineering investment first? Yeah, you go ahead. Okay. I'll talk about that, yeah. As you highlighted, and you all know, we have been under-invested when it comes to R&D over the last several years. As we had such a rapid acceleration of revenue, it's been very difficult to keep up from a hiring perspective. We are now approaching our long-term model of 10%-12%, and we talked about this morning. You know, we're able to spend, you know, a fraction, half, about half probably of what our peers spend in this area because we have a very efficient model, both from a platform and our resources. That's been a hallmark of the company from the very beginning, really, thanks to Eric and his foresight to set the company up in such a way. That will continue. I mean, we certainly have diversified our hiring approach when it comes to engineering, but continuing to focus on being as absolutely as efficient as possible. In terms of stock-based comp, I think we're gonna give the sort of a longer term view on this when we get to Q4 and we talk about FY 2024. I wanna remind everybody about why you've seen an elevation in our stock-based comp over the last several quarters. It's really about ensuring retention in our employee base and continuing to deliver happiness. Just as a quick refresher, some of you have probably heard this, but the way that we grant equity, which is a very important part of our compensation philosophy, is based on a dollar amount that goes into a new employee's offer letter. Then we back into the number of RSUs by using a 60-day average at that point in time. While employees that got hired a year ago, 18 months ago, when the stock price was very, very elevated, when they came to their first anniversary where they're actually now vested and able to sell some of that stock, many of them were underwater, if you will, or under that value that had been in their offer letter. That does not really promote employee happiness, especially when you think about during that first year, that's when employees are the most at risk for potentially leaving. They aren't vested and they aren't invested in the company yet. We have a program in place where we are doing top-up grants. If employees are under that value upon their first-year anniversary, we are topping up those grants to get them back to that level. We think this is really important for long-term retention and the way that gets amortized in because that top-up grant continues to vest over the remaining period of their grant, the four-year grant. You're gonna see this elevated stock-based comp for a period of time. Again, it's all about promoting retention, which is really key to our long-term strategy of growth and development, innovation, all the things you heard us talk about today. Just quickly. Yeah, thank you, Kelly. Just quickly to add on to that. I think in the future, that will not be a big problem. The reason why for any company where you see the overpriced stock, right, for a while and there's any value, right, in between for those employees who join, what can you do? You have to do something like this, right? I do not think our stock price will be, you know, back to 500 again, you know, for the time being, right? That's why that kind of problem will be gone in the future. Yeah. Yeah. As the stock has stabilized, we're gonna see less of an issue on that. Exactly. Yeah. Yeah. Thanks very much. Michael Turrin with Wells Fargo. Thank you for hosting us today. Greg, maybe since we haven't heard from you, we can start with you and the others, Eric and Kelly can follow on. You came from Google, so I'm just curious your views on co-opetition and competition, particularly around the surrounding productivity products. Obviously, there's email and calendar attached now. There's been a lot of effort around phone. Can you just speak to- I can. What you have to get right to win these surrounding apps and where the toe hold with meetings from your perspective provides a strong advantage? I definitely can. Yeah, I mean there's two big players out there when it comes to email and calendar, and it's Google on one side and Microsoft on the other. Very different, though. I mean, Microsoft is a really big player in the enterprise space. They've been there forever. You know, Google is still at the lower end, the SMB space and consumer space, right? So they do blend and they do compete. I know a lot of you probably didn't see the announcement around email and calendar, but our goal is not to take on Google or Microsoft when it comes to the enterprise space at all, right? A lot of our customers use those products. They like those products. However, to go back and forth between multiple applications, different windows or I'll say panes of glass, to move between the applications is very cumbersome, right? I mean, our whole goal here is to make it really easy for a user that is a meeting user and a phone user and wants to be able to access their email and their chat very seamlessly back and forth, from one screen, right? Our users want that, right? On the back end, we'll work with Google. We've got a great relationship. We'll work with Microsoft. We've got a good, you know, cooperative relationship. We'll continue to do that, right? Our goal is not to go out there and be in this competitive force with them in the enterprise space. Okay. Yeah, by the way, actually, you know, both Google and Microsoft, both of them are very supportive, you know, when we launched our email client, right? It's again, as Greg said, we are not looking to compete against them, right? We look at it from our user perspective, what we can do differently to improve our product and platform experience. Yeah. Okay. I think you're in the front. Thank you. Mark Murphy with JP Morgan. Wondering if you could comment on in the very long run, what do you think is gonna be the optimal mix of traffic that would be running through your own data centers versus through public cloud and why? How do you kind of arrive at the right math or the kind of optimal mix there, right, in terms of your gross margins and the customer experience? If you have time, could you comment on the adoption of Zoom One? I think we understand that it's very early, but someone had mentioned, I think, a SaaS company that has half their employees on that already. I think we're interested in trying to pencil out where you think Zoom One will kind of shake out in the very long run. Is this something that ends up Creating economics for you like Amazon Prime or like, well, Uber One. Is it something like that? Yeah, speaking of public cloud, I think there's two benefits. You know, one is, first of all, let's say when we go to the international market, right? We can quickly leverage a public cloud, right, to start with, right? It happened very often, and in terms of cost, also very manageable. Another way is, you know, let's say our free users, right? It's really hard to forecast, right, you know, the traffic for free users, especially over the past several years. Why not allow it a public cloud? Until we fully understand how customers are using our traffic, I think to use the public cloud always right. But look at our paid, like enterprise customer or the, you know, the high score customers, we know how they are using our product. To use our own data center for sure is great in terms of effectiveness and also it's cost efficiency, right? This is always our goal, bringing our big enterprise paid customer to our own cloud. But we always support both. You know, back to the question of Zoom One, you know, we do see where we're making a very good progress, in particular for customer to realize the value to deploy Zoom One. You know, they already deployed Meeting, they deployed Phone, and they realize, wow, Zoom has amazing Team Chat solution and also Whiteboard also part of that. I think customers love to, right, love to deploy that solution. Huge value. Plus, as Greg said, you know, Team Chat is free, and it's part of overall the Zoom One platform. We are giving it more and more value. Essentially, we position Zoom One more like a hybrid working operating system, right? Either the customer use our service or maybe they integrate with other service like a ServiceNow, right, for the part of a business workflow. Essentially, that's our platform strategy, double down on Zoom One. We are making a very good progress. You look at the adoption rate of the Team Chat, in particular for those Zoom Phone customers, after they realize that Team Chat is amazing. Yeah. I would add to that, in that, you know, when you take a look at Zoom One, it wasn't about creating a new product. It was about the way we could package it and make it really easy for our customers to better understand the extended value and then have the ability to do business with us, right? Not have to go through all these independent, you know, cycles with us and buy independent products and go through the negotiation. It really makes it much easier for a customer to step in with us. Then as they grow and want to expand, we can expand on top of that. It's been very, very valuable for that. I mean, it sort of goes hand in hand with all the new branding we saw, where you've seen the slinky that really shows that, look, it's, you know, Zoom is much more than just a video company. We are a true platform. We can, you know, people really understand we do so much more now, and they can really put the platform story and the pieces together. Here. Ryan. Yeah. Ryan, please. Yeah. All right. Ryan MacWilliams, Barclays. Kelly, just at a high level, what's more important for Zoom in the medium term, getting back to double-digit top-line growth or maintaining 30% operating margins? I should let Eric answer that question. No, I'm just kidding. We—as, you know, as I said this morning, you know, if you weren't all here this morning, we shared a view of our long-term model, and we are absolutely focused on investing for long-term growth and sustainable long-term growth. Somebody asked me in the hallway, you know, your AG margins are actually, what you shared this morning is going down from where you are today, and that's because we are continuing to invest, especially in sales and marketing, even beyond where we are today, adding to our direct sales organization, continuing to build out our international channel program. Really all of that is focused on continuing to build long-term sustainable growth rates. Perfect. Just to follow up, I liked Wendy's presentation, where she highlighted the benefit to online revenues from the shift in meeting times for free users. I think you know where I'm going with this. Could this particularly benefit the third quarter? Would email and chat represent a similar monetization opportunity here? Thanks. Hey, you want me to take that? Yeah. Please. Yeah. I don't want to give you specifics about Q3, right? But I can say, I mean, you saw the slide on churn, right? And we're back to pre-pandemic churn levels, which is fantastic. There's all those initiatives we're running in order to not just, you know, slow down churn or stop churn or, you know, reduce a bit, also to really help every one of those customers, whether they are free or they are, you know, paying at some level, to understand there's a lot more value they can get from us, right? If you think about email and you think about calendar, that's an area where a lot of them do have other solutions, and they are paying for those solutions. If we can provide them a level of that solution at no cost, if they're a paying customer of ours, they will make that move, right? They, you know, the one thing about email and calendar from Zoom is, our goal is to, you know, to be simpler, to be, you know, more user-friendly, right? To really target that, you know, whether it's a consumer, prosumer, SMB world, to target them with something they can really leverage every day. Okay? I think it will help. That's a big yes. The other thing we had is, I know you didn't ask about this, but I don't know if you saw the announcement of Essential Apps, right? We've got a whole bunch of app partners that have built extensions around Zoom that we have a lot of customers, especially at the low end, that just love those. They're all young companies. They've been built with our SDK on our platform. Now we've packaged them together, and we're taking them into that entire customer base that Wendy has, and they can actually leverage all those apps for no cost for the first year. As long as they're a paying customer of Zoom, not free, right? That gives them another reason to stay with us, become very sticky, and get more value out of our application. Yep. Meta Marshall? Somebody else. Sorry, just one second. He'll bring you a mic. You're dead center. Meta Marshall, Morgan Stanley. At the IPO, you had said you expected meetings to be about half of your long-term revenue. Yeah. kind of ancillary products to be about half. As you've expanded the platform, how do you think about kind of that ratio going forward? Then maybe second, you know, I know you get asked this every quarter, but just in terms of your capital structure, you're extending the platform a lot. How do you consider M&A versus kind of other alternatives with the capital structure? Yeah. Thanks. You know, we haven't really changed our outlook that for the long-term future, we expect meetings to be about half. You know, we said in the past, phone 25% and the balance of the products to make up probably another 25%. I mean, we can see if Eric has a differing view, but remember, meetings has such a huge head start that it's gonna take a while, but we have such an expanded wheelhouse now that I think we'd all be happy at some point if meetings was less than half. But it you know, again, we have years and years, I think, for that to take hold. I'm sorry, what was the second part of your question? I forgot. Capital structure. Okay. Yes. I mean, Eric, do you wanna add anything to what I just said first? I think, yeah, first of all, you're so right. Another thing, actually, we sort of shifted away from just the Meetings to those individual products. I do not think, you know, back to the 2019 IPO story, you know, percentage of Meetings or Phone or other, you know, I think that, I do not think that's a long-term or sustainable model. The reason why is, you know, we are focused on platform, right? Customers trust our brand, right? Down the road, I think just focus on platform, the Phone, Meetings, Whiteboard, Team Chat, everything is a part of that. That's our growth strategy. Otherwise, you focus on individual product. The problem today, if you focus on individual product, it's very hard for you to market that, right? That's the reason why we have a Team Chat. Nobody knows that, right? That's why we want to focus on the platform, right? That can, you know, dramatically change our future, you know, growth trajectory. Yeah. In terms of capital deployment, just as a reminder, our board did authorize a billion-dollar share buyback, and we'll have an update for that in our call in two weeks. If you have any M&A questions, ask Sanjay. He's back there. No, I'm just kidding. M&A is a very important part of our growth strategy going forward. You know, we... You saw already some of the outputs from our Solvvy acquisition, which has been tremendous. Really, those technology tuck-ins to accelerate and expand our platform have worked very, very well, and we're continuing to look for opportunities. I think the reason, part of the reason why you haven't seen more is, you know, we have a very high bar for both technology and talent, and wanting to make sure that we never disrupt our culture. Eric is a very hard judge here. We keep looking and are constantly evaluating opportunities, and I'm sure you will see more of that in the future. Yeah. Kelly, the point is, I'm an engineer. I can write a code rather than buy a lot of solutions. Yep. Here, please. Tim Arshad with Credit Suisse. You've updated us on your long-term sales and marketing targets, yet you have two components of your go-to-market approach, a lower-touch product-led, and increasingly a higher-touch sales-led, partner-led approach. Could you help us understand, as you think about the long-term structure of your business, how is the business split between those two channels? Yes. As we set those long-term margins, we certainly have taken into consideration how we expect those businesses to keep evolving in terms of percentage of our overall contribution. You know, just, I'm not gonna give you exact decisions, but I'll give you some touch points. If you remember, pre-pandemic, online contributed about 20% of our revenue. During the pandemic, that went up all the way to almost 60%. Now, you know, we're approximately 50% right now. We do expect a lot of our future growth to come from the enterprise, but with the online continuing to stabilize, right, and also be a growth driver, but not at the same rate as enterprise. All of that was taken into consideration when we set those margins because, as you highlighted, it is absolutely accurate. The online business is more efficient as it's more of a self-serve, but that has been considered and where we think that will eventually sort of level out over time. Yeah. Thank you, Kelly. One more thing, actually, I'd like to share with you. You look at our online business, right? It used to be we just focus on, you know, our product, our online customers, online revenue growth. Actually, there's a hidden value. You look at our online business, which is our go-to-market machine, right? Today, we only sell Zoom, you know, the service, Zoom platform. You know, what if we make our online business become a platform, right? Not only do we sell our own service, but also, as Greg mentioned, a third party, you know, solutions, even for other SaaS companies. The reason why today, you look at any SaaS companies, as long as they have SMB business, everyone sort of, they're facing a challenge for online business. We already figured out a very, you know, I think a sustainable, profitable way to run our online business. Why not make it a platform to sell any other SaaS services, other new solutions? That's a hidden value I think we are going to explore, and this is very important for our future growth for online business because the brand is already there. You know, go-to-market model also there, right? Why do we want other SaaS companies? They have to repeat all those hard work. We already make it work already today. Again, that's a hidden value we are going to further explore. Yeah, I think there's another question right here, please, Lisa. Hey, team, it's Darren Baker from PRIMECAP. Thanks for spending time with us today. You know, I'll ask another question that I know has been asked before, but I'd love to just hear kind of how you're thinking about it most recently. You know, Microsoft in recent years has made no secret of the fact that Teams is a key kind of centerpiece to their strategy within their productivity business. And in particular, you know, most recently, they've talked. Their growth is very much kind of tied to the idea that people, you know, will kind of upsell into these higher bundles that include more capabilities around Teams and around telephony and meetings and so on. I know that, you know, among those who are following Zoom as an investment, there's certainly concern that as we come into kind of the, you know, three-ish year mark here, like after the start of the pandemic, that some of the contracts that you guys maybe had done in the enterprise would be coming up for renewal and that, you know, Microsoft would be coming in with a very aggressive play to try and win away, you know, those people who are using primarily your meetings products, but also that, you know, they would be looking at opportunities to get, you know, the broader, UCaaS suite in there as well. I'd just love to hear kind of how you're thinking most recently about, that competitive dynamic. You know, any kind of commentary or thoughts you could provide on just how you think the next year or two play out in the enterprise side of the business with those core products and rather than maybe the product upsells we've been talking a lot about today. Thank you. Greg, you want I can take a stab at it. Yeah, yeah. Yeah, no, you can add to it. Look, you know, there's definitely room, you know, in the world and the market for more than one player. There's no doubt about that, right? There are companies that, and you'll meet a lot of them here, that Zoom saved their companies in the last couple of years. They know what kind of company we are. They know that when we say we're gonna do something, we do it, and we are innovating at a rate that our competition could never innovate. What we do in one year, they can't do in 10 years. We will have a platform that will continue to stay ahead of where our competition is. We'll have a platform that really, it's all built on the same architecture, right? It's all built with a, you know, a really, really small front end. It's stable, it's usable. It's why people love it, right? If you are a company, I guess, that is really, really trying to cut costs, right, and you're doing it through your IT office, you know, maybe you'll try to move some more people to other options. We haven't seen that. Okay? We have, you know, seen people that said, "Look, I've made a big investment over here. I've been with them for 10 years. I've been with you for 3 or 4 years. What's the right way to live in harmony together?" Right? It's, you know, where the line gets a little blurry is when you start dealing with chat, you know, if they put in their foundation how to deal with ours, since we'd start with a meeting and bring it in, or if they started with ours, it's the same question on the other side. How do we take it all the way down to their artifacts, right? In the enterprise, there is gonna be a world going forward where, we can be the best communication platform out there, especially when you're dealing with the external world. 'Cause what you can't afford to do is when you're doing your investor conferences or you're doing your sales calls or anything that is external, you know, have a subpar experience for your user, for your customer, for, you know, the outside party. That's how I'll answer it. It doesn't mean we're not gonna compete in certain places, but the world's a big place. You wanna add? Yeah. Thank you, Greg. I think, you know, 2 smaller thing I wanna add on to what Greg said. One thing is you look at those enterprise customers, right? In particular for those enterprise customers who truly care about employee experience, you have to give employee a tool that will work best for Zoom. It's very important because you look at the young graduates from universities, almost every university, they deploy Zoom. They're very familiar. For those enterprise customers say, "Yeah, I do not care about employee experience. I just care about cost. There's an abundant solution." Guess what? Employee, they are not happy. Their department might buy Zoom solution, right? Because Zoom is sort of becoming a very trustful brand. You know, customer really enjoy using that. More like I use my iPhone, I never want to switch anymore, right? Even you give me something for free, right? That is very important. Another thing, as Greg, you know, mentioned, right? We have to innovate fast, you know, faster than them, right? The reason why we're doubling our engineering resources, you know, we have a lot of new stuff in the pipeline. You know, plus even for enterprise customers, you know, we have a, you know, took recently, right? We closed, we cannot mention a name, right? The big banks, right? They also deploy Zoom Phone as well. They also explore Zoom Whiteboard as well because they trust us. They know we truly care about them. That's why, you know, also market is big, right? You know, I think that's why, you know, competition is always healthy. Again, the market is huge, right? I always think a market accommodates three or four players, but two players is very, very healthy. Yeah. It's good for us, good for Microsoft, good for customers too. Back, please. Nope. Thank you. I'm sorry. No, go ahead. Sorry. Are we good? Yeah, please. Peter Levine with Evercore ISI. I guess sticking with contact center, can you tell us, you know, for customers that choose Zoom, like, who are they replacing? Or are these customers running it alongside a competing offering? And then going to Phone, you've done a good job scaling that business, but maybe share with us any metrics around net new deals that lead with Phone, meaning customers that are new to Zoom, and then maybe talk about pricing. Where do you see pricing on Phone kind of troughing out? Thank you. Why don't you start in contact center. Yeah. You look at a contact center, and I think look at the deals we closed, right? I think pretty much replacing other cloud-based contact center solutions, and also have new use cases, right? Internal IT desk, integrate Zoom, for example, right? We are replacing, you know, a lot, another, you know, cloud-based contact center solution with our Zoom Contact Center. Our team very excited. It works so well and much better quality also. Again, you know, I think down the road, probably we are going to replace because we do see some deals in the pipeline for other on-prem and contact center, you know, solution, right? We're also going to replace them as well. Because for now, it's relatively straightforward. Customer, they're already familiar with cloud-based contact center. They look at Zoom 'cause they already deployed Zoom Phone. It's sort of relatively straightforward for them to, you know, switch to our, you know, contact center solution. Yeah. Yeah. I would say on the phone side, I don't know if Graham's still here, if you wanna add Graham. You know, on the phone side, we've seen this incredible progress. In 3 years, we're over 4 million users now, and I don't see that slowing. You know, the thing about Phone and the way we've developed it is a huge money saver. Like, in general, we really like to push the value we bring, not just on the bottom line, but the top line. But when you really look at the way, you know, we've designed Phone and the number of countries in the world we support and the technologies that are out there that are, you know, that have been around for a while, whether cloud or on-premise, we save an incredible amount of money. We're just moving into a place where when we walk into a, you know, Eric and I are just on with a very, very large retailer with, I don't know, 2,800 stores around the U.S. last week with their CEO. You know, the business case we put together with them, and they filled in all the numbers, saves them, you know, $ multiple millions per month, right? It's all about how do we replace the, you know, these legacy multiple systems as fast as possible. You know, as we continue to press that on the TCO around Phone for the next 12 months, especially in this economy, it'll continue to pay back for us. Once again, that, you know, because it's on the same platform, it's tied into Meetings, it's tied into Contact Center, you know, now we start to get that, you know, that slinky value proposition, and we get, you know, the user using the single pane of glass, so it really becomes sticky. I'm not sure I answered your question exactly, but Just to quickly add on to what Greg said. You know, back to 3.5 years ago when we introduced Zoom Phone, I do not think anyone thought we can make a very good progress on Phone side. You know, but you look at today's, the number, I think two reasons. One, first reason, Greg already shared. Another reason I can tell you, I think that's a secret sauce. The Zoom Phone quality is indeed much better than any other cloud-based phone service provider. You can do a test. Otherwise, we cannot win so many deals, right? That's the number one reason why we're winning. I think, you know, given that we built our own contact center solution, I think, we would like to follow a similar growth, you know, journey as well, right? The quality, you know, is extremely important for the Phone and for the Contact Center, so. Okay. Yeah, right here. Oh, right. Sorry. We'll do that one and then that one, and then that's probably what we have time for. Thank you. Hey there. This is Alan Rokosky on for Alex Zukin from Wolfe Research. Thanks for taking the question. Kelly, just one for you. I'd love to hear how you're thinking about the headwind that could come to the enterprise business next year, from a slowdown of seat growth, you know, just within the context of the recession, the increasing news we're seeing about layoffs. Just kind of open-ended from there. Yeah. Thanks. We'll have more around this specifically related to Q3 on our call in a couple of weeks. As we talked about on the Q2 call, what we certainly have seen is deals coming under much more scrutiny. You know, my peers, the CFO, getting involved in many more deals. Greg knows I spend more time in Q3 on calls with prospects than I probably have ever done in the past. They care a lot about deal structure. Obviously, price is being really important. Again, Zoom is amazing, right? Because if you just heard all the ways that we can help bring more value to those customers, we can help reduce costs, we can help them consolidate onto fewer vendors, which is really something that CFOs, you know, care about a lot. Those are all the values and the great ways that we help even in these, you know, economic, when we're facing economic headwinds in general, and why we will continue to see expansion of the platform overall. Okay. I think there was one more. Great. Yeah. Thanks for squeezing me in. Yeah. Seth Gilbert from UBS. It's actually maybe a little bit of a similar question, but I'll ask it maybe a slightly different way. You know, a lot of investors are concerned about the macro environment, the slowing deal elongation, like you mentioned. I'm just wondering if there's the top two or three things that you all are doing to try and counteract these. Is it new products contribution to growth? Is it cross-selling, upselling? Is it making new feature enhancements to make the product more sticky? Like, if you had to rank the maybe top two or three, how would you classify it? Yeah. Want me to go? Yeah. I think first, and then I think Kelly mentioned this is, you know, from a selling perspective, making sure early on in every single deal, we're not just dealing with one executive. It's not just the CIO, it is the CFO, it is the procurement organization. We're covering all the bases to make sure that the value proposition, the business case is tight, and we've got all the sponsors or the approvers aligned early. That's really, really key, right? That'll make sure our deals stick, right? The good news is that a large number of these deals that we are doing is not just, you know, helping on the top line, but it also really does help on the bottom line. Most of them have very, very solid business cases that actually take cost out of these organizations. We can, it's very tangible. It's very tangible around phone, it's very tangible around sales IQ, you know, it's very tangible around contact center. As we lay that out, I mean, right now in this environment, things that help you take cost out of the equation and then also bring additional value, get attention on things that don't, right? We're very lucky. The other thing we're very lucky at is that we have such a, you know, a large customer base that opens their door to us. We're not out there just knocking on doors saying, "Please give us attention." You know, they open the door for us, we can have the, you know, the trusted advisor discussion, and that really does help us. Puts us in a really good position. I mean, we're, you know, as we move into the future, you know, you know, we have to give the deals the additional attention with the additional buyers. I would say, as a sales team, our CROs here, summary's about to come up here a bit. You know, it is about doing also continuing to do more units per sales rep. That's where a lot of our add-on products come into play. Instead of depending on, you know, 2 or 3 really large deals, I'd rather have 10 times more smaller deals to make it up and plant those seeds and extend. That's how we're driving our sales force. Hopefully, that helped a little bit. Great. Yep. Maybe one more question? Yeah, we do have time. We have one more question. Anybody else? Yeah. Right here in the middle. Ask a burning question. Hi, Alex Zukin with William Blair. Just quickly on the partnership channel, could you maybe touch on any high-level thoughts or meetings you're having regarding initiatives? How do you plan on getting into the larger enterprise customers, and how might that play in with the larger GSIs? Yeah. That's a great question. Matter of fact, tomorrow we've got a big partner summit here, and we've probably got 400+, you know, people here in person and a whole bunch virtually. But, you know, we've got 10,000 partners today. And one of the things we need to do is be smarter about how we differentiate across those partners, especially those that influence go-to-market and new business. When you take a look at really the, I'll say, the top 30 or 40 that make up 70% of the business, you know, we're making a really big shift to really focus on those partners. You know, the big partners in not just in the U.S., but even places like Japan that move the needle. You know, as we move into the future next year, we'll be running a lot of very specific big plays with those partners, the NESIC in Japan or the CDWs here in, you know, North America, because they really give us a lot of reach if we invest in them, right? That's a really big thing for us. The other thing is, you know, when you take a look at new products we've mentioned, you know, contact center sales, you know, IQ, they're not in our partners' bags yet. There is a run right now in order to get our partners bringing those products to market as well, right? We'll see a big lift from you know, the partners in those new products in the platform. Okay? Great. Well, thank you so much, Eric, for joining us today, as well as Greg. We really appreciate your time, and thank you, everybody. Yeah. Maybe just a quick comment, actually. First of all, again, thank you so much for coming here. Actually, if you have time, you know, please randomly talk with some of our customers, right? Ask them why, you know, they like using Zoom product, why they trust Zoom, you know, what's their feedback. Probably can answer to a lot of the questions already. Again, thank you so much. You know, so excited to see you all in person. Yeah. I was gonna thank you as well, 'cause I know some of you made a long journey. Also, I'd recommend walking through the, you know, the show floor in the middle here. There's a lot of different partners we have out there that are showcasing, you know, whether it's, you know, the, you know, their devices that work with Zoom or additional applications. It's a really good way to see how people are extending our application and really extending the value, which once again gets sticky for all of our customers. Take a walk. I just did the walk when we had a little break, and I was blown away. Me too. Yep. Great. Thank you. Appreciate it. Thank you both. Thank you. Great. Thank you, everybody. We're gonna bring up Ryan Azus, our Chief Revenue Officer, and a couple of our key customers here. He said, let's talk to some key customers. I think that's probably the perfect thing to be doing, and I'm really excited and proud to have a couple great customers with us here. Jill, come on up. Jill Popelka, not an easy one to say, but Jill, from Take-Two Interactive, and Julio Pereira. Julio from World Fuel Services, welcome. Yeah. 2 Fortune 1000 companies, they're able to kinda join us and, you know, share their story. Great. Thank you. I guess, you know, for starters, and maybe we'll start, you know, just even, you know, background. Why don't you go first, Julio? Just a little bit about yourself and of course, you know, World Fuel Services for those that might not be familiar. Excellent. Thank you for having us. My name is Julio Pereira. I am one of the productivity leaders on the IT side for World Fuel Services. World Fuel focuses on energy management and logistics, supplying fuel for aviation, marine, transportation, and commercial. We've been a Zoom customer for over four years now. Going on Fortune 100, company. We're going for it, yeah. Actually, it's not just 1,000. Jill. Jill Popelka. I've been in technology about 30 years. I'm currently working at Take-Two Interactive. That's gaming, like Rockstar Games and 2K are two of the bigger labels. I am VP of operations, and prior to that, I was at Discovery Channel for 12 and a half years, running all their operations with about 300 people in 32 countries. No offense, but my kids are gonna be more excited about 2K, in all truth. You know, we're They need energy. We're definitely excited to have you both. You know, why don't we start, you know, talk about the journey. Jill, why don't you start us off? Just kinda, you know, how Zoom got started, and like you said earlier, I know that's kind of across a couple different organizations. Yeah. Talk to us about that. Right. It'll be like the combination of Discovery. Yeah Take-Two. Discovery, the journey kind of started with the need to collapse environments. You think about 2016, 2017, you know, we're still rolling carts into rooms. There's still not a face-to-face, like, client that you can sit down and really work well with. Through M&A, and I've done 21 of them now, a lot comes from being able to go through and collaborate and bring things together. One M&A that we had in 2017 sort of broke the camel's back, and made us have to make a decision. I made the decision for Zoom, actually, and thought my team was gonna kill me. Because they were not a fan necessarily, the ease of use is what drove me there. The other platform we were using just, it's too cumbersome, and when you're talking about rolling something out to humans that don't necessarily know technology, you need that easy button. Cool. How about on your end? How about the journey, kind of where it got started and how you got there? Absolutely. Yeah. 2018, I think facing similar challenges as many organizations, which is not embracing video conferencing because it was too difficult or interoperability wasn't there. That's how we started on video conferencing. That really started to shape the way our organization worked. It's a global organization across 200 countries and really moving on to sort of like the unified communication platform, which we then transitioned in early 2019 with Zoom Phone, which I was privy to the previous panel on what were some of the benefits, and really resonated a lot with us, which is reducing costs, simplifying our infrastructure, moving to the cloud, which was our cloud strategy. Then across that enablement of Zoom Rooms to be able to really collaborate across the globe. That really transpired into how users embraced and really drove the transformation around communications. Awesome. Thank you. Yeah. You know, Jill, they did show earlier the Warner Bros. Discovery video. You might have seen that. I was like, "There's my boss. There's my team. With Dave and the team. You know, you use heavily Zoom in two different organizations, right? Different cultures, you know, both, I think, on the creative side. Talk about what's similar, what's different, kinda looking at it from the viewpoint of the different companies. It's so similar. Really, you know, the whole creative space is so different than a lot of the other spaces. Yes, of course, we use Zoom for video conferencing. We're always a video first. It's—I'm never gonna look at somebody's initials or their picture. We're almost all video so that we can connect. It's not just about that. In fact, it's maybe 60% about that and about 40% on how we leverage Zoom to do all sorts of creative things. Even before the pandemic, from a cost savings perspective, Discovery-wise, the need to trim costs when we're talking about production, you know, it used to be in the old days, you would bring in the producers and everybody else to an editing suite that's swanky, and you would hang out, and you would do the editing together. That's expensive, right? When you're looking at trimming costs, that's one of the first things that they did there, is they trimmed costs, and we leveraged Zoom in order to be able to do that, remotely. That was, I'm gonna say, 2019, maybe even before then. Costs are always the primary thing, especially in creative companies. When you think about the pandemic and what that did from a Take-Two perspective, you know, obviously you're not going into a live motion studio with your producers and you're having somebody do a dunk so that you can capture that for a game. You're not doing that anymore, right? That was all done remotely with multiple cameras, live action video, where you've got the producers who are remote telling, you know, "Dunk again, go higher," whatever. That all became remote. That is still remote today, a lot of it. I can go on and on and on about all the creative ways that the tool is used. I think it struck me yesterday when I met with the events team, and they were talking about, you know, all the cool things that they're seeing from events. I said, "And you have no idea all the cool things that are happening within companies that you're not seeing." It's fascinating. Well, thank you. We love hearing it because we think of certain use cases, right? Amazing just meeting, when you peel that back, people aren't just meeting. There's so much more that they're doing on the platform, even for the video aspects, let alone all the other applications that we've been talking about. You know, speaking of other applications, contact center have come up a couple times I think today. You know, I know that's something that, you know, you're looking at with World Fuel. Talk to us a little bit about your intentions there, what you're seeing, kinda your current contact center situation. Absolutely. I think the strength is really the partnership that we built through the Zoom Phone deployment, which was that constant feedback and product feature evaluation that allowed us to really voice what was really needed in the marketplace for us. Contact Center is something that we've used for a long time, and it was something that was very limited in functionality. If we rewind about a year and a half, when the Power Pack came out and we started exploring that, we saw a really big opportunity that we wanted to kind of build as the unified communications platform for us. We, you know, luckily, it evolved into a really functional, strong product that we're launching it as part of our service desk. We already have customers that are on other competitive contact centers that are looking to simplify. I think I've heard rationalize the number of products, reducing your software subscription spend. How do you do that with a unified communication platform? We believe that Zoom will allow us to leverage in that space around the contact center as well. If I'm listening, kind of building upon the trust of what Phone has done for you, the use cases, and then how do you transfer that over to the Contact Center? Absolutely. Do you mind saying who, what you have today? Yeah. Vendors have been? We had what we said, the silver, gold, and bronze, but we have Amazon Connect, which is a little bit too involved and not very user-friendly. Does the job, but doesn't really allow the scalability in a very simple terms. When you want to empower the business units to be able to build their call flows and adjust their settings, it's not the most friendlier tool. We've also working with Five9 as well. It's a very mature platform, but it does take you away from that interoperability, and there is a lot of IT overhead that is required both from the partner and ourselves to make sure that everything works very seamless. Naturally for us strategically is how do we build this all into the same platform where our users live in day in, day out, and they can communicate with the rest of the organization without having to learn a new system. Awesome. Thank you. Yeah. How about on your side, Jill? Like, how's the use of Zoom through multiple products, how's that kind of evolved, and how do you see that? I think you also just closed a recent acquisition or maybe. Yep. -integrated. Can't get out of it. Everywhere I go, I'm just another M&A. You know, it's interesting to watch how we initially started using Zoom, which was just for that face-to-face conferencing and for meetings, which was life-changing. Moving on to like town halls, and let me tell you, like pre-Zoom town halls, and I didn't own it at that time. It bombs every time. I'm like, "Oh, thank God that's not my space." Until it was my space, right? That just would always go seamlessly. The rooms and everything else, now we're getting ready to leverage events. Seeing the Zoom itself grow and us take advantage of it, the broadcasting was just announced. That will be up our alley. Mm. As we get ready to expand that a little bit. Also just the use of integration with tools. We're a heavy Slack team. Again, creatives like to not be bound by a thing. They like to have the creativity to have best-in-breed products that they stitch together. Slack is one of those. I think probably 50% of our meetings end up being Slack Zoom in Slack and in order to collaborate. Leveraging the integration. Mm-hmm. Yeah. How about on your side? Any comments just about the evolution? Yeah. I mean, I think, you know, moving from traditional video conferencing rooms, Zoom Phone, there's a lot of potential we saw and heard throughout today around Teams and how the Zoom Spots, which is really what every organization is looking to solve is how do you maintain that culture of integration with employees being all over the world. And we see Zoom at the forefront of helping customers like us be able to make those solutions a lot simpler so that we don't have to kind of scratch our heads and say, "What additional tools do we need to bring here when we already have them?" Zoom continues to build on it. That, that's where that spot came from, right? Yeah. Customers saying, "Hey, we've been on site, we've been remote, but we're missing the water cooler. Yeah. Like, you know, how do we walk down the hall? What is that, and how do you know, work to recreate that? That's an evolution, but like, how is that done to capture those moments that, you know, aren't as formal, as a typical meeting or an interaction, those types of things. Absolutely. You know, how about on rooms? Talk about, you know, why don't you start, like, the hybrid strategy, like what is that like for your company? Like what is return to office? I know that comes up a lot and, you know, it's constantly changing for many of us. What is that? How about the rooms and, you know, talk about how that's being used within your company. Yeah. I mean, that's probably one of the reasons or one of many reasons why I'm here, is looking and hearing from peers and others, how are they looking to solve this problem? 'Cause it's definitely something that is evident. You have different schools of thought, whether you bring people certain times a week or whether you let them be wherever they are. The way we are embracing it today is we allow people to be productive wherever they need to be and encourage them to come to the office whenever it makes sense. For that, we have to have the tools such as Zoom Rooms to be able to bridge that experience for folks that are remote and folks that are on-prem as well. It's challenging. It's something that we've seen some product features with new technology coming out that's gonna help make that even better than what it is today. Along the lines, it's really just being able to have the Zoom Rooms capability, the huddle rooms, the whiteboarding, all of that, how do you make it interact, whether you're remote or on-prem in the office space? For us, Zoom Rooms has been, I'd say, the one... You sort of plant the seed, and then all of a sudden you realize you have your customers coming, knocking on your door and saying, "I want a Zoom Room in my department, and I want a Zoom Room in my department." That's really how it exploded, which today we're over 125 rooms across, I'd say about 130 sites that we have rationalized so far. All right. I think you probably have less real estate in the portfolio on 130 sites, but probably a similar footprint of rooms. What's that like for Take-Two? We probably at Discovery probably had 600 rooms. Yeah. I'll tell you how that happens. In 2016, again, creatives are always so aggressive, we were running out of space in one of our locations, and so we had to have an early solution to hybrid working. We worked on a soft phone solution that was horrible, 2016. You know, it was clean desk policy. Everybody. You found your place. We had neighborhoods that people would sync into, et cetera, and that was in order to save real estate space. Just as that grew, the need for Zoom grew. As we got more mature, I would say we did it wrong three times as we were going through that until we found the right spaces and things that worked. You know, telephone booths that people can connect in, a pod of six people that you can connect in. What we've learned and what I still see today is, like, everybody wants to say they have collaboration spaces. Okay, if they're in an open space, nobody's gonna use them. Mm. They just will not get used like a space that's enclosed will get used. There's a million different kinds of furniture solutions now to provide you with that kind of enclosed space that still feels good. Honestly, Take-Two is looking at as well now, but Discovery takes the cake. Their office that they build out on Park Central right as I was leaving probably has about 150 collaboration spaces that are like 2-person, 1-person, 5-person, all sorts of different configurations to meet those needs because there aren't offices. It's just kind of fascinating how, you know, the way that we have flex working and all these things going on turns into the need to collaborate in a space that's confined but doesn't feel like, you know, you don't need a whole. I don't need a whole build-out of a conference room. I can make it pretty inexpensive with lower priced gear, having these smaller spaces. Yeah. Awesome. You know, maybe Jill, competition, like, how does Zoom differentiate itself for you? First, you know, just competition or even other vendors. I mean, you know, in both your roles, like, there's a variety of software solutions, hardware. Yeah. I mean, you're buying, I'm sure there's a lot of folks knocking on your door. What do you see even good or bad, you know, Zoom versus others? You know, it's interesting, again, you go back to, like, the creativity and the use of Zoom, and that's what's always gonna propel us to be in a product that allows us to have flexibility. I think one of the best instances of flexibility that I can give you that brings home the need for Zoom for us is during the pandemic, Strauss Zelnick, who is the CEO, is a very big fitness buff, and he decided he was gonna do a boot camp for everybody in the company. We rolled out there. I wasn't there at the time, but they rolled out there and to a barn and set up a big AV system for him so that he could do workouts. That has transformed into a full Beachbody workout that he performs. Right. For real? For real, man. For real. Like, when I saw the broadcasting- Talk about your CEO. Hi, everybody else. Yeah. Yeah. Good thing Eric's not here. Yeah. Yeah. I mean, it's a differentiator. It is definitely a persona thing, right? What started out as this small, like, we'll leverage Zoom to do workouts has turned into, I'm not joking, like, the whole countdown of the workouts and everything else. We have to leverage Zoom in creative ways because although it looks like a Zoom meeting, really, we're doing it from a control center. We're using it as a transmitter. He wants to be able to see and talk to those people, so we have to trick Zoom in certain ways to be able to do that. Same thing with town halls. He doesn't want a webinar where he's speaking at people. He wants to see the rooms. He wants it to be interactive, and that's just, you know, not something I can get with any other product. Awesome. They just keep pushing the envelope of all that crazy. All right. I better come in my exercise gear when I come on site. Yeah. Yes. How about on your end? How do you see the competition or even other vendors that you work with? Yeah. Definitely everybody wants to get a piece of the pie, right? It really boils down to which product works, which ones do you have the trust and the confidence that it's gonna be simple, it's gonna be reliable, it's secure. The other part is really the feature enrichment of the continuous deployment of new features and functionality that are always outpacing the use cases that we have. Sometimes we find ourselves looking at the release notes and saying, "What is there that I can bring into my business units that they're either suffering or have heard it through, you know, other channels?" We, you know, and everybody kinda cringes a little bit when they have to join a Webex session and, you know, it takes 3 minutes to join, and it's the typical, "All right, we're waiting for more people to join," and the meeting already starts late. Those sort of things we take for granted today because we are now used to that 1 click works high definition. When I do have the Webexes and the Teams, Microsoft Teams coming to us and saying, "Why don't you leverage it? You already own it," it's not about the economics, it's about the productivity and the user adoption. I don't see any competition. Can you say that again? Wait. Hold on. It's not about the economics, about the users, the productivity. I think. Can we get that on a written quote? No. I think that the economics, I mean, there is. We're going through renewals right now and obviously Zoom One is at the forefront, and it's really about, you know, how do you show your journey as you reduce operating budget significantly. You know, and the other part that's really hard to measure, which is the complexity of maintaining infrastructure, data centers, hardware that has capital expenses. So doing that cost analysis really is a no-brainer. That's why I say, you know, it's the economics is not a problem. You're gonna bring out all my sales calls. You know, any comments just working with our team? I know you've worked with our team for a long time, any comments what you see or don't see there? Well, I'll just say up front that I am known for being tough but fair, sometimes more tough than fair. I'm not shy about when things don't work or what my expectations are. I always kind of put two camps with the suppliers that I work with, one is a partner and one is a vendor. There are very few people that fall into the partner space, and Zoom is one of them. As an example of that, we just went through renewal, and we're in the middle of an M&A, and my favorite thing is negotiating contracts and all those kind of things. We had a very, very short runway. I phoned a friend at Zoom, and I'm like, "Hey, I know you're not on my account anymore, but I need something right now. Like, I need you to..." all these things. They managed to pull this together, and I think the uniqueness with Zoom is that there's the flexibility of me being able to say, "But I don't need that, and I don't need that." There's not this rigid structure I have to fit into from a licensing perspective. It's something that I have a little bit more flexibility on with Zoom, and they were willing to go back a couple times and do an adjustment. Like, I can tell where they're like, "No, no, not here," but maybe we have flexibility in some other areas. We structured this deal in a matter of two or three minutes. I wasn't surprised when I talked with the person that I love to go to that the WBD deal was signed in, like, three weeks. I'm like, "Of course it was." Because the cost savings that you can show are just astronomical when you're talking about an M&A and being able to look at, I always call it the do nothing or the do something approach. If I've got handsets, if I've got a PBX, if I've got resources supporting it, if I've got a maintenance contract, that is a no-brainer. I am gonna save money all day long. Can we get that in a quote too? We're recording this, right? I hope. I guess just kinda closing off, I mean, the world's changing. There's a lot going on. You know, we've had the COVID, the post-COVID. Is it really over? Economy and other things, you know. How do you see kinda Zoom evolving in, you know, with everything that's going on, you know, kind of around the world and even for your company? I mean, for us, it's just deeper, stronger and faster. Again, thinking about creatives are always gonna be probably more cost-conscious than many. Also, with the M&As, it's just a constant. It's one of the easiest things to do in an M&A. Some of the harder things to do are, like, to integrate identity platforms. Those are tough. I love that stuff, but it's tough. This is the easiest. When you go into an M&A, one of the first things I look at is all this. Do you have handsets? Do you have those things? Do you have Zoom? Great, then we'll integrate those two, and we've done that multiple times. It's interesting to watch that, as people have Zoom and now we're, like, combining the Zoom instances and still negotiating contract for a better rate. All those things for me, it's more of a double down on the Zoom side, which means I might be even more tough than fair as we come up. I think quality is king, especially for us. You think about content creation and IP, it's all we care about. I know as I'm pressing Zoom to don't forget that core product of video and audio, that's it for me. That's my life. As I push and push and push at that one, I want that 30 frames per second. I always say, too, "The second you do that, I want 60," right? Always gonna keep pushing. I think that, you know, the growth there is it's amazing to see all the features and functions and the way people are using it. The creatives are all always gonna be after that, video quality and content and then leveraging all the other things that you come up with. Thank you. How about on your end? I mean, I agree with everything Jill has mentioned. I think the piece I'll add to that is we heard a lot of departments coming together around after the pandemic, which is your real estate, your IT, and your human resources. I think there should be a lot more insight as we're seeing with a lot of the data analytics and AI of how do you learn from what your employees are needing or wanting, and how do you get ahead of that. I think that's definitely a huge space, and we're seeing already as part of Zoomtopia's announcement. The other aspect is what's the foundation of good quality video is network and really having a robust network that is modern. Those partnerships, I think, are gonna allow, you know, more products of Zoom to be able to grow and expand, 'cause, you know, we do businesses in like little farms and fields, and sometimes we need that ability to provide the technology, but the means to get it there is really sometimes the biggest struggle. We hope to see a lot of, hopefully, partnerships around the network to help expand even further. Yeah. We're always working on that. Yeah. In fact, we announced one, I think, during this event with Palo Alto Networks, which is taking a lot of the data from both Zoom and the Palo Alto, putting those together and letting you much, you know, look at your network from a security and a bandwidth point. You know, he reminded me of something that's also very important. M&A, of course, always about the cost savings, but as you make that transition from a legacy telephony structure over into Zoom, what you can't really get from the telephony side is, like, who's using their phone? How often are they using their phone? Like, yes, you can go through the legacy call records, et cetera, but that's a tough slog. When you move over to Zoom, you have all that rich data available to you. You don't have. It's rarely like for like, because you can't see that if you have 300 people, are all 300 using their phone? I always caution, like, "Let's go 150 and see what happens." We don't actually give Zoom Phone licenses out to anybody anymore because we don't need it, right? We need it where we need it, but it's not something we would give out to every human. That's from looking at that data and being able to say, "Look, we're giving out licenses and nobody's using them because they're finding other ways to leverage Zoom, the core product." You get not only that savings from doing the initial thing, but then you get that ability to look strategically and see what you're doing. Thank you both. Appreciate your time. You bet. of course, your partnership. Absolutely. All right. With that, I think we'll have Kelly come back up to close us out. Thank you. You're welcome. All right. Thank you, Jill, Julio, and Ryan for those amazing insights. As Ryan said, we're just gonna take that recording and put it on repeat for the next quarter or two. Okay. That is our day. Thank you so much to everybody that made the effort to join us here in person and to those of you that joined us virtually as well. We hope first of all that you found this information insightful and helpful. If you have any feedback, of course, Tom and Charles or I are always happy to hear from you. Please, for those of you that are in the room, take the time, go enjoy the expo hall, meet some customers, meet some partners, meet some salespeople. They're all here roaming around, and I think it's incredibly beneficial for you to have the opportunity to spend some time with them. Last but not least, we look forward to seeing you on the 21st for our Q3 earnings call. Thank you again for coming.