Well, hello everyone, and welcome to Zoom's Q3 FY 2024 Earnings Release Webinar. As a reminder, today's webinar is being recorded, and now I will hand things over to Tom McCallum, Head of Investor Relations. Tom, over to you. Thank you, Kelsey. Hello everyone, and welcome to Zoom's Earnings Video Webinar For The Third Quarter of Fiscal Year 2024. I'm joined today by Zoom's founder and CEO, Eric Yuan, and Zoom CFO, Kelly Steckelberg. Our earnings press release was issued today after the market closed and may be downloaded from the investor relations page at investors.zoom.us. Also on this page, you'll be able to find a copy of today's prepared remarks and a slide deck with financial highlights, and along with our earnings release, include a reconciliation of GAAP to non-GAAP financial results. During this call, we will make forward-looking statements, including statements regarding our financial outlook for the fourth quarter and full fiscal year 2024, our expectations regarding financial and business trends, impacts from the macroeconomic environment, our market position, opportunities, go-to-market initiatives, growth strategy, and business aspirations, and product initiatives, and the expected benefits of such initiatives. These statements are only predictions that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to the risks and other factors that could affect our performance and financial results, which we discuss in detail in our filings with the SEC, including the annual report on Form 10-K and quarterly reports on Form 10-Q. Zoom assumes no obligation to update any forward-looking statements we may make on today's webinar. With that, let me turn the discussion over to Eric. Hey, thank you, Tom. Thank you, everyone, for joining us today. In early October, we hosted a Zoomtopia, our yearly customer and innovation-focused event, and it was awesome. Like last year, we ran a hybrid on Zoom Events. Thousands joined us in person and many multiples of that virtually. Among the in-person attendees were 40 customer presenters, such as JPMorgan, MIT, Boston Consulting Group, HubSpot, and Kohl's, who spoke about their amazing experiences on Zoom and excitement about the future. We also showcased newly released innovations like Zoom AI Companion, as well as Zoom AI Expert Assist and Quality Management for the contact center. Zoom AI Companion is especially noteworthy for being included at no additional cost to our paid plans and has fared tremendously well, with over 220,000 accounts enabling it, and 2.8 million meeting summaries created as of today. Remarkable growth in less than three months. At Zoomtopia, I also had the pleasure of sharing the stage with Flex, a global manufacturing and supply chain leader, who spoke about how they use Zoom to connect their large distributor workforce of 170,000 employees across 30 countries. Flex started using Zoom Meetings in 2017, quickly followed by Zoom Rooms and Zoom Team Chat. Since then, Flex increased Team Chat users by 200% and Zoom Rooms by 245%. They also became power users of Zoom Whiteboard, creating over 13,000 whiteboards, and moving to Zoom Phone allowed them to eliminate 50%-70% of circuits and infrastructure across the globe and reduce total cost of ownership. We were so happy to have Flex share their journey at Zoomtopia, and I cannot wait for what is in store for our partnership next. Now, moving on to some of our customer wins in Q3. First, let me thank JobsOhio, who has been an amazing customer for many years, starting with Meetings and then extending to Zoom Rooms, Phone, and Events. In Q3, they selected Zoom Virtual Agent and Zoom Contact Center to provide world-class AI-enabled support to their global user base. Let me also thank Amynta Group, a premier insurance services company, who initially adopted Zoom Phone and Zoom Contact Center on a limited scale in Q1 of this year. Seeing how our modern solution offered superior agility, customization for sales flows, and administrative functionality, in Q3, they decided to standardize their customer-facing sales support on the Zoom stack and add workforce management, leading to a nearly five times increase in their monthly spend with us. I'd also like to congratulate the Virgin Group on their launch of Workvivo to bring together 60,000 employees across almost 40 Virgin companies on one platform. The Virgin Family Workvivo platform is helping to drive social connection, encourage collaboration, and boost brand knowledge.... It's inspiring to see how the Virgin Group is bringing the platform to life and strengthening culture with Zoom's workplace. These wins are a testament to the investment we are making in our customer experience offering, with a rapid pace of new innovations like workforce management, quality management, Zoom Virtual Agent, and AI Expert Assist. They also highlight our progress with employee experience, especially with integrating Workvivo into the Zoom client. Thank you so much to JobsOhio, Amynta, and Virgin Group. Love you all. And with that, I'll pass it over to Kelly. Thank you. Thank you, Eric, and hello, everyone. We are pleased that we beat our top line and profitability guidance in Q3. Here are a few milestones. First, Zoom Phone reached approximately 7 million paid seats. Second, Zoom Contact Center reached approximately 700 customers as of quarter end, while Zoom Virtual Agent customers nearly doubled quarter-over-quarter. And finally, the number of customers on Zoom One bundles that include Zoom Phone grew approximately 330% year-over-year. These proof points demonstrate our customers' willingness to entrust us with their critical CX and EX processes, and their commitment to grow with us as we expand our platform. In Q3, total revenue came in at $1.137 billion, up 3% year-over-year, and 4% in constant currency. This result was approximately $17 million above the high end of our guidance. Our enterprise business grew 8% year-over-year and represented 58% of total revenue, up from 56% a year ago. We continue to see improvement in online average monthly churn, which decreased to 3.0% from 3.1% in Q3 of FY 2023. This is the lowest churn rate we have ever reported. The number of enterprise customers grew 5% year-over-year to approximately 219,700. Our trailing 12 month net dollar expansion rate for enterprise customers in Q3 came in at 105%. We saw 14% year-over-year growth in the upmarket as we ended the quarter with 3,731 customers, contributing more than $100,000 in trailing 12 months revenue. These customers represent 29% of revenue, up from 27% in Q3 of FY 2023. Our Americas revenue grew 5% year-over-year, while EMEA and APAC declined by 2% each. On a constant currency basis, APAC grew slightly year-over-year. Moving to our non-GAAP results, which exclude stock-based compensation expense and associated payroll taxes, acquisition-related expenses, net gains or losses on strategic investments, and all associated tax effects. Non-GAAP gross margin in Q3 was 79.7%, an improvement from 79.5% in Q3 of last year, but slightly lower than the first half of this year. The strong performance in gross margin was primarily driven by the optimization of usage across the public cloud and our co-located data centers, partially offset by our additional investments in new AI technologies. For the full year, we expect non-GAAP gross margin to be approximately 80%. Non-GAAP operating income grew by 17% to $447 million, exceeding the high end of our guidance of $405 million. This translates to a 39.3% non-GAAP operating margin, a meaningful improvement from 34.6% in Q3 of last year. Non-GAAP diluted earnings per share in Q3 was $1.29 on approximately 310 million non-GAAP diluted weighted average shares outstanding. This result was $0.20 above the high end of our guidance and $0.22 higher than Q3 of last year. Turning to the balance sheet, deferred revenue at the end of the period was $1.32 billion, down approximately 3% from Q3 of last year. This was roughly one percentage point better than the high end of our guidance we provided last quarter. For Q4, we expect deferred revenue to be down 6%-8% year-over-year, partially driven by shorter billing frequencies on enterprise deals arising from the high interest rate environment. Looking at both our billed and unbilled contracts, our RPO increased 10% year-over-year to approximately $3.6 billion. We expect to recognize approximately 58% of the total RPO as revenue over the next 12 months, as compared to 59% in Q3 of last year, indicating lengthening contract durations on a year-over-year basis. As a reminder, our renewal seasonality peaks in Q1 and declines throughout the rest of the year. Operating cash flow in the quarter grew 67% year-over-year to $493 million. Free cash flow grew 66% year-over-year to $453 million. The sharp increase in our cash flow metrics was due to stronger collections, targeted expense management, and higher interest income. Our operating cash flow and free cash flow margins expanded to 43.4% and 39.9%, respectively. We ended the quarter with approximately $6.5 billion in cash, cash equivalents, and marketable securities, excluding restricted cash. Given the strength and profitability in collections, we are increasing our free cash flow outlook for FY 2024. We now expect free cash flow to be in the range of $1.34 billion-$1.35 billion, which at the midpoint, would represent 13% year-over-year growth. Turning to guidance. For Q4, we expect revenue to be in the range of $1.125 billion-$1.13 billion, which at the midpoint, would represent approximately 1% year-over-year growth. Adjusting for currency impact, this projection is slightly higher than the previously implied guidance from our Q2 call. We expect non-GAAP operating income to be in the range of $409 million-$414 million. Our outlook for non-GAAP earnings per share is $1.13-$1.15, based on approximately 312 million shares outstanding. We are also pleased to raise our top line and profitability outlook for the full year of FY 2024. We now expect revenue to be in the range of $4.506 billion-$4.511 billion, which at the midpoint represents approximately 3% year-over-year growth. We expect our non-GAAP operating income to be in the range of $1.74 billion-$1.745 billion, representing an operating margin of approximately 39%. Our outlook for non-GAAP earnings per share for FY 2024 is $4.93-$4.95, based on approximately 308 million shares outstanding. Thank you to the entire Zoom team, our customers, our community, and our investors for your trust and support. Kelsey, please queue up the first question. Thank you, Kelly. As Kelly mentioned, we will now move into the Q&A session. When I call your name, please turn on your video and unmute. As a reminder, in an effort to hear from everyone, please limit yourself to one question, and we thank you in advance for your consideration. Our first question will come from Ryan McWilliams with Barclays. Hey, guys, thanks for taking the question. Just to start with Kelly, do you notice any changes in the overall macro environment in the third quarter compared to the second quarter? And could you touch on how linearity did throughout the quarter for new bookings? Thanks. Yeah. Hi, Ryan. So the macro has been pretty consistent from Q2 to Q3. We continue to see, you know, similar trends in terms of deal scrutiny, back-end loaded. So the quarter from a direct perspective was fairly back-end loaded. As a reminder, the online segment of the business is typically pretty linear throughout the quarter. I think the only thing that got a little worse from Q2 to Q3 was actually FX, as you saw in Asia-Pac. That had, you know, that was a fairly significant headwind for us, whereas Asia-Pac would have at least been flat year-over-year, if not for that impact. Thanks, guys. Moving on to Meta Marshall with Morgan Stanley. Great, thanks. Maybe just a question on kind of what feedback you're getting on the AI Companion, and that's a pretty big jump in kind of customers using it. So just what features are they really liking? You know, and is it kind of helping with some of the free-to-paid conversion that you guys were hoping for? Thanks. Yes, great question. I think we are very, very proud of our team's progress. You know, since we launched the Zoom AI Companion, you know, as I mentioned earlier, right, a lot of accounts enabled that. Remember, this is no additional cost to our paid customers. You know, a lot of features, one, you know, one feature of that is, like, take a meeting summary, for example. Amazingly, it's very accurate, and it save, really save the meeting host a lot of time. And also, you know, our Federated AI approach really contributed to that success, because we do not count on a single AI model, and in terms of latency, accuracy, and the, you know, and also the, you know, the response, you know, the, the speed and so on and so forth, I think really helped, you know, our AI Companion. Again, for even the online Pro users, you know, also is no additional cost. For sure, for free users, you know, they do not... they cannot enjoy this Companion. You know, for sure, it did help, you know, for those free, you know, to approve for online upgrade. So anyway, we are, you know, keep innovating on AI Companion. We have a high confidence that's a true differentiation compared to any other, you know, AI, you know, features, functionalities offered by some of our, you know, competitors. Great. Thanks so much. Thank you. Our next question will come from Kash Rangan with Goldman Sachs. Hi, thank you very much. Good to see the results, and Happy Thanksgiving. I just had one question, if I could restrict myself to one. The SMB online churn, 3%, I know it came down from 3.1%. Any initiatives that you are undertaking that could bring that number even down more significantly? Because I would assume that that would have big implications for your growth rate and margins, which are already quite good. Thank you so much. Well, Wendy and her team are always working on initiatives, but I think what Eric was just mentioning about AI is probably really going to be a key differentiator and a retention tool in the future. Because, as a reminder, all of the AI Companion features come included for our free, sorry, for our paid users. So we're seeing it not only help with conversion, but we really believe that for the long term, it will help with retention as well. You know, Cash, I've gotten this question many times, and I would say, like, this is the lowest we've ever seen, but also our platform is so much better. It's infinitely better than where it was pre-on a pre-pandemic basis for our online users. So I think we will. This is how we're modeling is at this level, but I think over time, you should continue to see retention just continue to improve. Yeah. Thank you so much. Yeah. By the way, to add on to what Kelly said, also, Happy Thanksgiving to you as well. So as more and more customers realize, wow, Zoom, even for online users, is not only for Zoom Meetings, a lot of other features, right? And like, take a Zoom Team Chat, for example, there's this great persistent chat solution is part of offering, even for free users as well, right? For the paid user, for sure, a lot of other features. The more they spend time on Zoom platform, realize, wow, this is pretty powerful, not only just for meetings, the entire platform. Got it. Thanks so much, Eric and Kelly. Yeah. Wells Fargo's Michael Turrin, please go ahead with your question. Hey, great. Thanks. Nice to see everyone. I guess, as a complement to Kash's question, you're showing stabilization here on some of the major metrics. The enterprise expansion metric took a step down to 105%. And so just wondering what it takes for that metric to similarly show stabilization. Is it due to that Q1 renewal cohort and kind of walking through that? Anything on the product side for us to consider or just any other commentary there is helpful. Thank you. Well, as a reminder, it's a trailing 12 month metric, so, you know, as we've obviously seen our, our growth rates come down this year, that's following behind it. But absolutely, we believe that AI Companion, in general, as well as the success that we are seeing in Zoom Phone, in Zoom Contact Center, Zoom Virtual Agent, all of those will be key contributors to seeing that metric start to re-accelerate again, as we see our growth rate starting to re-accelerate as well. Thank you. Our next question will come from Michael Funk with Bank of America. Yeah, hi. Thank you for the question tonight. So just on the deferred revenue guidance for 4Q, Kelly, and the commentary on the macro and the rates affecting that, how should we think about growth rate in calendar year 2024, given the decline in deferred revenue and impact on new deals from enterprise? Yeah, so I mean, what's very interesting, if you look at, right, you see growth in RPO, but you're seeing a decline in deferred revenue, which implies customers, while they're committing for long-term agreements, they are preferring to pay in shorter-term increments to keep their cash and take advantage of the interest rate environment. So, the other thing, as a reminder, right, we're gonna have a big renewal cycle in Q1, and then that's the peak, and it's gonna come down. And we believe that in FY 2024, that we're currently in, we had the majority of our customers had some sort of renewal period during FY 2024, which means that we believe that we've moved through a lot of our customers that were impacted themselves by a reduction. You know, we've talked in the past about how our team has been doing a great job of preserving that spend. But to the extent we're helping them right-size or transition from Zoom Meetings to, say, a Zoom One bundle, we think the majority of our customers... We, we know the majority of our customers have gone through that renewal period in FY 2024, so that by the time we get into FY 2025, hopefully, we're in a little more normalized renewal cycle. Great. Thank you. Yeah. Moving on to Karl Keirstead with UBS. Hey, great. Thank you. Hey, hey, Kelly, the phone business has been a big part of the Zoom growth algorithm lately. So I'm wondering if you could elaborate on how that part of the business did in the quarter. On the surface, and I know that you round that seat number, but it looks like the sequential phone seat adds might have been a lot less than the last several quarters. Maybe that's rounding, but I wanted to give you a platform maybe to elaborate about that part of the business. Thank you. So, you know, Q3, cyclically, just as a reminder, Q1 and Q3, cyclically, are our lower quarters, given that our enterprise reps, some of our enterprise reps are on six-month quotas. So we've historically seen the big Zoom Phone, you know, addition, add quarters be in Q2 and Q4. What we did see in Q3 was that customers in the upper segments, so customers with greater than 10,000 seats, grew almost 9% quarter-over-quarter. So we're seeing a lot of strength in that upper end of Zoom Phone. So really happy with that. I mean, that's the largest increase we've had so far this year. And then, as a reminder, we haven't always given that metric, honestly, at the exact same period, so it's a little bit hard for you to tell exactly how it's trending every single quarter. As just in the past, we'll continue to update you on, you know, future milestones as they make sense. Okay. Thank you. Yeah. George Iwanyc with Oppenheimer has the next question. All right. Well, thank you for taking my question. So Kelly, maybe following up on Zoom Phone, can you give us a bit of extra color on contact center and the, you know, customer traction you're seeing there? Yeah. So as we mentioned, we're up to over 700 customers on Zoom Contact Center, and we saw our Zoom Virtual Agent product double the number of customers quarter-over-quarter. So really excited there. I mean, maybe Eric can talk about some of the features and functionality, but, you know, we're thrilled with the progress that we're making there so far. ... Yeah, so we are, we are extremely excited about our contact center opportunity, and it feels like back to a few years ago when we announced Zoom Phone, right? Quite often, a lot of people mention, "Wow, it will take you guys many years to get recognized, deployed by large customers," and you know, look at what we have today in terms of number of paid seat for Phone. I feel like, you know, if we ask well, I think we are going to follow a similar, you know, journey and maybe even better. Because you look at our contact center, you know, and modern architecture, extremely scalable, and plus a lot of AI features and innovation speed. I think whenever customer really take a Zoom Contact Center seriously, evaluate Zoom Contact Center, the feedback is very consistent: "Wow! I did not realize you guys have a so powerful contact center." It's just amazing, right? I think that this further boosted our team's confidence. Let's double down, triple down our own contact center. Again, it's modern architecture, very scalable. I also shared quite a few customer, you know, cases, right, during this call, and we are very, very excited. A lot of, you know, new AI features, you know, virtual agent and workforce management, and so on and so forth. This is something we are very, very excited. Thank you. Thank you. We'll now hear from Peter Levine with Evercore. Great. Thank you for taking my question here. Maybe for Kelly is, I look at gross margins, how sustainable is it keeping at these levels? I know AI Companion being given away from, you know, as a, you know, part of the package, I guess, for, for paying users. But if you think about the costs to run these models, the margin profile of Contact Center and Phone, you know, how durable is it to kind of sustain these levels? And then second, as you think it to next year, you have been guided, but what's the best way to think about stock-based comp, and dilution as you kind of manage through that? Yeah. So in terms of our gross margins, we'll obviously give FY20 25 guidance on our call next quarter. But as we are working on our planning, you know, our DevOps team is doing an amazing job of continuing to optimize around the data centers and being very thoughtful about leveraging capacity to its highest and best use, and making room for all of this AI innovation. So, while we are going to invest, and we're actually going to invest to the extent that XD and the team really believe that we need to, and that for the long term, it's an amazing ROI when you look at what it's gonna do for our customers, for our growth, and for our retention. But we do expect there's going to be some impact on gross margins. I... I mean, I don't think it's gonna be significant because the team will continue to operate in the very efficient manner that they do and run our colos that way. But we do expect there's gonna be some impact to our gross margins as we move forward. You want to add anything, Eric? Yeah, sure. You are so right on. Just to echo on what Kelly said, you know, led by our CTO, XD, and his team, you know, our Federated AI approach, as I mentioned earlier, really contribute a lot. So, you know, for sure, you know, and there's a cost impact, but extremely manageable, right? And our team really, really, you know, I think that, you know, had a very smart, you know, Federated AI, you know, architecture. That's why I think, you know, in terms of cost, very manageable, but also the quality is, is pretty good, so. And we are, you know, keep innovating on that, so. Thank you very much. Thanks, Eric. Peter, regarding, stock-based comp, about a third of our expense this year is related to the supplemental grants. So as a reminder, those that vest, as along with how the underlying grants are vesting. So there's a couple more years for that to just start to bleed off, if you will. But you can model that out. Thank you. Yeah. We will now hear from Patrick Walravens with JMP Securities. Oh, great. Thank you. Hi. So, Eric, what is your ideal customer profile on the contact center side of the business? It's a great question. I think, you know, first of all, again, this is based on architecture and AI features. I think for now, the medium size, because the reason why for very, very large customers, even if our architecture, everything, every ready, but sometimes they just want to look at, "Hey, you know, you are still so early," but even our product fully ready. That's why reason why sometimes even we do not reach out to them. Very large, let's say tens of thousands agent customers, if they take our solution seriously- Oops, did Eric freeze or did I freeze? I think Eric is frozen. I didn't know if it was me. Yeah. Okay. Like, wait, okay, let me- Uh, uh- Pat, you're still here, right? I'm here. Okay. Yeah, sorry for that. You're back. Okay. Yeah, yeah. Eric, we lost you for a minute there. Yeah, I'm sorry. So given the, you know, the new solution, right, sort of a modern architecture and all the new AI features, my point is, if those are, you know, let's say like 20,000 or 10,000 agent customers, if they look at our solution seriously, we have a confidence. Because of that, you know, we want to be a little bit proactive, you know, focus on medium-sized companies, like from hundreds of agents to thousands of agents. That's our sweet spot. But we are not gonna stop here, as I mentioned earlier, any of them, any very big, large, you know, companies, when they look at our contact center solution seriously, we have a confidence we are going to win. But however, to get there, we are focused on the medium-sized companies. Great. Thank you. I could give you a quick example, Patrick. We have a customer called Vensure, which they provide, like, payroll and HR services, and in the last year, they've doubled their Zoom Phone seats, they've doubled their contact center seats into four digits now. They also have deployed workforce management as well as quality management and ZVA. So really taking advantage of the full suite of Zoom products, you know, not only the contact center and its extensions, but the full suite of Zoom. And I think when they start to deploy like that, they really see the power, and it's been very exciting to see them grow. Okay, great. Thank you both. Thank you. Our next question comes from Arjun Bhatia with William Blair. Perfect, thank you. Can you just touch on the international business a little bit? It seems like it's certainly trailing the U.S., but what gets that business to turn around? And maybe talk about some of your new growth drivers and how they're faring there with Zoom Phone and Contact Center. Thank you. Yeah. Yeah. So, you know, unfortunately, both EMEA and APAC over the last year have been impacted both by currency, and then, EMEA has been impacted by the general economy and the war there. But in terms of our focus, we have, very recently actually added a new European leader and a new leader, in Australia and New Zealand, so we're very excited about the team. And since we did the reorganization earlier this year, those regions have just taken a little bit longer than, the US, but we're starting to see that momentum build again, and really excited about what they're gonna contribute and watching their success in the future. All right. Thank you. Yeah. Our next question will come from Alex Zukin with Wolfe Research. His video is not on, so he may just be audio only. Hi, Alex. Alex- Hey, guys. Did you wanna go ahead? This is Ethan Rackers on for Alex. He's, he's in transit right now. Ah. Thank you guys- Hi, Ethan ... for taking my question. Hey, I just had two quick questions. Just how do we think, at what level should we expect or when for the NRR of the enterprise cohort to trough? And just any kind of puts and takes around enterprise revenue in the quarter, right? It came in above your expectations, it grew sequentially. And it was also... It was positive, like, you know, RPO, CRPO bookings, those all accelerated. Yeah. I guess, is it fair to think that for next year's enterprise growth rate would be above what's implied in the 4Q guide? Just if you could give any more kind of color around the 4Q numbers and kind of what you're expecting in the online churn, that would be helpful. Thank you. Yeah. So we did see strength in the direct bookings. They were very back-end loaded in Q3, which just continues this theme that we've been talking about in terms of, you know, the overall macro. And as we look forward to Q4, you know, we have typically the benefit of having year-end, where customers are having their year-end on 12/31, and then we have our year-end on January 31st. And of course, we have our six-month quota-carrying reps that are coming to the end of their quota cycle, so hopefully taking advantage of their accelerators. But we are expecting, you know, similar behavior in terms of even if we have a 12/31 sort of bump, we're expecting that to be back-end loaded, and then the January 31st one as well. You know, in terms of your question around net dollar expansion, we're not gonna give... We, I mean, we don't guide on that. I expect that, given your growth rates have come down a little bit more, that there might be a little bit more room for that to come down even further until it starts to stabilize and probably re-accelerate sometime next year. Okay, thank you. And then just a quick follow-up. Yeah. Just on the comment you made in your prepared remarks around the shorter billing duration, I guess, is there just any way to qualitatively think relative to Q3 if there's any change, just how to think about obviously people moving to maybe more different shorter payment terms? Just how we think about that in terms of what's implied in the 4Q guide. Thank you. Yeah, we so we commented first time we started seeing this trend was in Q2. If you remember, we also talked about this in our prepared remarks as we saw this happening, and given the interest rates are high, I don't expect it's gonna change anytime soon. I think the good news is, from the health of the underlying business, right, customers are committing to longer-term duration contracts. They just are preferring to pay on shorter term. And yet, you know, we obviously had very strong cash flow in the period, so I, I don't think it's something you should be worried about. Got it. Thank you very much, and congrats on the nice results. Thanks. Our next question is going to come from Mark Murphy with JPMorgan. Mark will be audio only. Hi, Mark. Thank you, Ellie. This is Arti Vula from Mark Murphy. Thanks for taking the question, and, congrats on the quarter. You guys called out the Virgin Group and their launch of Workvivo across, I think, 60,000 employees and a number of the workforce-related innovations you've launched recently. Can you just speak to the adoption of those products and what kind of momentum you're seeing on that front? Thank you. Yeah. Do you wanna take that? Yeah, you go ahead. Yeah, Kelly, go ahead. Yeah, I mean, we're really excited about Workvivo. They... You know, first of all, in terms of operating, they're continuing to run as an operating unit, which we're making sure that we support them in their continued momentum, and we've already talked about, we talked about Dollar General on the call last quarter and their amazing adoption. So we're really excited about that team. They, when they joined us, we said, "Welcome to the family," and gave them an accelerated bookings target, and they are running and achieving against that. So really thrilled to have them and watching them continue to succeed. ... Great. Thank you. All right, our next question's going to come from Catherine Trebnick with Rosenblatt. Well, thanks for taking my question. Nice quarter. Has your appetite for M&A changed at all in the last year? You know, all day long on CNBC, they kept saying, "Oh, you know, we're looking for growth, reacceleration of growth." So I'm just wondering if you're looking at the $6.5 billion and your attitude towards M&A. Thank you. Yes, thank you, Catherine. M&A is something that we evaluate and think about as a potential strategy all the time. I have a corp dev team that looks at opportunities on a daily basis, and, you know, we have a very strong lens that we look through in terms of evaluating. That is, first of all, the technology and what does it bring to our customers? We would always wanna make sure that our customers continue to enjoy a really high-quality product like they do with Zoom today. We look at the culture to make sure that it's something that we think would work well with Zoom. It's usually a really good indicator of the success of integrating two companies. And then, of course, we look at the lens of valuation, and does it make sense? Is it a price that we are willing to pay? And because we have such a high bar, it honestly has been hard to find companies that we love, that, that makes it through all three of those tests. It doesn't mean that we wouldn't love to find someone that did. There are some really great companies out there, and for one reason or the other, to date, we just haven't, you know, found the right match, but it doesn't mean that, that we won't. And that is why we have purposely remained... You know, retained, I should say, the flexibility of having that cash on our balance sheet, so that if we do see something interesting, we're able to, you know, act on it. Moving on to KeyBanc's Tom Blakey. Thank you very much. Good to see you, Eric, and hi, hi, Kelly. Hi, Tom. Just wondering quickly on the stability that we were talking about a couple quarters ago in online. It's pretty impressive that, you know, we went back and forth on that a little bit here, and Yeah ... it's been very stable. And, you know, obviously, we talked about the record churn. Can you just maybe, maybe update us that, on, on, on that in terms of, you know- Yeah ... do we expect the same type of stability in online into the fiscal 4Q and maybe even similarly into fiscal 2025? That'd be helpful. Thank you. Yeah. You know, so the team has done a lot of work this year to on many fronts around online. First of all, stabilizing retention, which you're seeing the benefits of that today, as well as focusing on free-to-paid conversion, because it's really important that we're continuing to fill the top of the funnel, and those are things like forced breaks. And the, as Eric mentioned earlier, also being able to procure additional products online, things like Whiteboard and Scheduler, are very well aligned with the strategy of our online buyers. So those are all of the initiatives that Wendy and her team are continuing to focus on. I mean, we hold ourselves to a very high standard when we say stabilization. What we really wanna see is dollar stabilization quarter over quarter, and while it's very, very close, it's not quite there, and I expect it'll be slightly down, just very, very slightly down again in Q4. But as we're working on FY 2025 planning with the team, really looking forward to initiatives that drive stabilization, and if not, some growth into FY 2025. Very helpful. Thank you, Kelly. Yep. The next question's from Shebly Seyrafi with FBN Securities. Yes, so thank you very much. You guided deferred revenue to decline 6%-8% in Q4, due to shorter billing frequencies with enterprise customers. The question I have is: What kind of decline would that have been without that billing frequency change? And related to this, you're gonna have a big renewal cycle in Q1, so do you expect deferred revenue growth to pick up meaningfully in Q1? Yes. So as a reminder, the way the deferred revenue trends throughout the year is it's always the highest in Q1, and then it declines throughout the year. And there's two things that are happening. First of all, Q1 is the largest renewal period, so the bucket gets filled up, and then that's getting amortized through the rest of the year. But also, the subsequent renewal cycles are lower than Q1. So it's the inverse of probably every other SaaS company in the world, where usually you're adding higher renewals every single quarter, we are actually adding a lower number, you know, a lower dollar amount of renewals every single quarter. As Q1's getting amortized down, what's coming in to refill the top of that bucket is coming down every single quarter, and that's why you have seen, for quite a number of years now, typically, a sequential decline in deferred revenue quarter-over-quarter. Okay, thanks. Yeah. We'll now hear from James Fish with Piper Sandler. Hey, guys. Thanks for the questions here. Appreciate all the details around some of the product lines. But, you know, building off of a few prior questions, with that contact center, customer count up to about 700 versus the 500, last quarter, you know, if my math's right, given kind of what you guys have talked about with price points, kinda seems like we're nearing $100 million of ARR now, or, or how should we think about that average seat count at this point? And then, Eric, for you, look, it got released and was available this quarter, but how has that, workforce engagement solution, really gone in terms of penetration, with the contact center installed base? Is, is that acting as sort of a consolidation function, underneath for especially that small mid-market? Thanks, guys. ... Yeah, Eric, go. No, you go ahead. Go ahead first. Oh, I think you look at a contact center, right? So not only just to offer us to offer the whole contact center of capabilities, we wanna offer a full, you know, platform, right? Including workforce management, right? This is the modern based on modern architecture, not as something like, "Hey, you have on-premises solution for a long time, you just put it into the, in the cloud." That's not the case. We built everything from the ground up. It's tightly integrated with our core contact center solutions. That's the reason why, you know, you look at our, you know, customers, right? From SMB, medium-sized, all the way to large enterprise. I think we are ready. However, as I mentioned earlier, sweet spot should be the, you know, the, you know, middle, right? However, one thing is we realized, customers, they want to have one seamless experience for everything, contact center, workforce management, and virtual agent, AI features, core engine, right? So we are trying to offer all of them, you know, so that's the kind of, you know, our strategy. In terms of workforce management contribution, it really helped. Because we tell customer, "Hey, we offer everything to you. You know, we are not going to, A, letting you, you know, deploy other third-party workforce management solutions. We offer all the services, all the functionality to you with one platform. Yeah. And James, in, you know, in terms of your ability to kind of understand how those products are progressing themselves, we'll do as we've done with others and announce milestone metrics as we start to see them emerge. They're just so new right now that it doesn't really make sense, but we will do that over time. Understood. Thanks, Kelly. Thanks, Eric. Yeah, yeah. We are not ready to share with a number, exact number yet about how many customers deployed Workforce Management, so stay tuned, you know, in the future quarters. Yes. Our next question will come from Matt VanVleet with BTIG. Yeah, good afternoon. Thanks for taking the question. I guess following up, one more on sort of the contact center and Zoom Phone. In terms of overall customer mix, you're well below 1% penetration on customer or on contact center here. Is there a target that you think is sort of the, you know, next few years of the customers you're gonna go after? How high do you think of the, you know, roughly 200,000 customers you have, have an existing contact center that you've maybe identified and can probably work your way into? And then sort of following up on that, what percentage, if you can share, of the over 100,000 customers, 100,000 revenue customers have Zoom Phone or Zoom Contact Center as an attachment there? So the, I guess the way that I think about Contact Center and its progress is that it's so far very, following a very similar, you know, roadmap, if you will, than that Zoom Phone did. So if you, if you think about... You know, we can see the visibility internally, just as we could with Zoom Phone. But in terms of ARR, as a metric, for example, it's gonna take a little while for that to be something that's visible to you. But so far, it's tracking in a very, very similar way that Zoom Phone did, which I think is very encouraging. And that, you know, we need a couple more years, and then it starts to be a really significant growth contributor. It just, you know, start small and then grows quickly, and that's what we're seeing. And also, if you look at opportunity, you know, very similar as well. Many years ago, a lot of enterprise customers, their phone, you know, UC deployment is still on-prem. Today, you look at- Mm ... most of enterprise customer contact centers are still on-prem. So, you know, that's why, you know, a lot of opportunity ahead of us. In particular, given our, you know, modern architecture is very scalable, so. Great. Thank you. Thanks. B. Riley's Ryan Koontz has the next question. Ryan, please go ahead. Hi, and, happy Thanksgiving- Mm-hmm … from Zoomtopia. Yeah, I came away really impressed with the Zoom Rooms and what you're doing there. The innovation really seems years ahead of the market, and I wondered what's your updated view on the Rooms opportunity for the company? Do you think it's strong enough that you can use that as a lead, as almost a standalone product? And do you see the market opportunity more promising for you, you know, with that product? Do you have any go-to-market initiatives, these sort of questions. Thank you. So yeah, Ryan, so speaking of the opportunity, you are so right. You know, and whenever, you know, customer, you know, for many years ago, right, they deployed Zoom Rooms for more and more customers, when they try to embrace hybrid work, they need to have a modern solution for their conference rooms. You know, they evaluated multiple solutions, Zoom Rooms indeed, you know, stands out. It's indeed, you know, years ahead of any other competitors. However, you know, sometimes, you know, you know, for customers, when they try to support a hybrid work, right, for now, they are in the middle of embracing hybrid work, right? What's the new layout of the entire, you know, workplace, and how many conference rooms they, they, they needed to, you know, support, and so on and so forth, right? That's why a lot of opportunities, at the same time, you know, we need us working together with customers. And not only for conference room innovation, but also entire workplace, you know, the, the management. What's the new layout and so on. So what's... I think a lot of opportunity, not only for conference room itself, like how to reserve a, reserve a desk, right? Mm-hmm. You know, all those things we already built in as a part of, you know, the Zoom Rooms. Like one example, like a digital signage, and also part of Zoom Rooms as well. It's a full, you know, the conference room or workplace, you know, solution. And that's why, you know, we needed to make sure focus on marketing side to share with customer. Again, Zoom Rooms is not only just for your conference room solution, but it's for hybrid work and also for entire workplace, you know, as well. ... That's great, Eric. Thank you. Thank you, Ryan. Thanks, Ryan. Now we'll move on to Peter Weed with Bernstein. Thank you. You know, I think for the first time, at least as far as I can look at in the model, you know, it looks like the kind of larger enterprises, greater than $100,000, enterprise customers were roughly flat quarter-over-quarter. But, you know, we're hearing, you know, the great stories about customer expansions, and the number of those customers has continued to increase, which would imply there's a whole another set of customers that are either shrinking or churning, and it appears that got more pronounced this quarter than perhaps we've seen, recently. How should we think about those effects? And, you know, is that more churn or is it downgrades? And, when customers are churning or downgrading, where are they going? Is this something that, that is kind of temporary, and you see it kind of ending, or is it something where, where we may have some pain for a bit of time before we get through some effects? Yeah. So, I think we've talked about this the last couple of quarters. We certainly have seen impact in our customers having retraction in their own businesses, in their own employee count. So if that's the situation, then we are working with them. The good news is we have not seen a lot of logo churn. It has been more downselling in terms of right-sizing their Meetings licenses numbers. And yet, even in that situation, our team is doing a great job of taking the opportunity to transition them from potentially Meetings to one of our Zoom One bundles that includes Phone. We talked about in our prepared remarks, we saw that grow over 300% year-over-year in terms of the number of customers that are using those bundles, and that's great for many reasons, right? In terms of retention and having more than one product deployed, we see is very advantageous to customer retention. So we certainly have worked with many, many, many of our customers this year on ensuring that they have the right package in place. But I also talked about earlier this, you know, earlier in the call, that we know that the majority of our customers have had some sort of renewal period in FY2024, meaning that we hope, we anticipate that as we get through the end of this year, we've moved through most of those transitions where organizations have done their own reductions and, you know, are aligning their licenses to that. But it sounds like you're not seeing an uptick in churn. This is mostly just that kind of reduction in force, and once we're through that, then you set a floor, and so that the expansions can kind of work going forward on all the great things people are buying, which, you know, even us at Bernstein- Yeah. - we, we, we- Yeah. Yeah ... we're great, great customers that love the product. So... Yeah. Yeah, I mean, that's. We're not giving up $125 guidance, just to be clear. But yeah, but that's in general what we anticipate, just knowing that we've worked through most of our, you know, customer renewals this year, and I assume that they've gotten through the, their reductions. Now, you know, it depends on what happens overall with the macro, but that's what we believe to be the case. Yes. Thank you. Yeah. Our next question will come from Taz Koujalgi with Wedbush. Oops, you're on mute. I'm sorry, can you guys hear me now? Yep. Thanks. Hi, question on Zoom Phone. So Kelly, can you give us the ARR last quarter? We have the Zoom Phone seat this quarter. If I do a rough math on the ASP, it comes down to, like, $78 or something per month, which seems like almost half or even more of the list price. If you can just confirm that, and has that- Yeah ... discounting gone- Yeah ... down, gone up? So as a reminder, you can buy Zoom Phone either for $10 per license per month if you have metered calling on top, or $15 if you get unlimited long distance. So it, the ASP is going to depend on, you know, which version of that, which of the SKU the customers are buying and how they come together. And then, if you think about some of our largest enterprise customers, we do discount not just for, obviously for Zoom Phone, but the overall value of their purchases or, you know, their value of being a customer for longevity in terms of length of cycles, willingness to pay upfront. So all of those things contribute, but it sounds like you're right in sort of the ballpark. We have not seen a dramatic shift in those discounts up or down. Just one follow-up. Is that similar to what you're seeing in the contact center versus your, I think the list price was $70 for contact center? Any comment on how the discounting in contact center compares to what you've seen in Zoom Phone? Yeah, no. I don't think if you can correlate them, they're very different products with a very different sales cycle and approach. So I don't think you can try to, you know, take a percentage discount necessarily from one product and expect it to apply to a different one. Thank you. Yeah. We will now hear from Tyler Radke with Citi. Hi, Tyler. Yeah, hi. Hi, good evening. So Kelly, if I look at the midpoint of your guidance for Q4, it's about 1% growth, and I know there's some currency in there. But how should we be thinking about that as a jumping-off point for fiscal year 2025? What are kind of the puts and takes that would cause growth to be higher than that, and also lower? It does sound like you're starting to see some stabilizations in parts of the business. But just help us frame how we should be thinking about that trajectory beyond Q4. ... Yeah. So we will obviously give FY20 25 guidance on the Q4 call. However, I do think that the Q4 implied exit rate and considerations around the macro, and if it, you know, is stabilizing or improving over time, are important considerations. You know, we do see. We've talked about many great aspects of our business today. You know, growth in phone, growth in contact center, stabilization in all online, all could be contributors that could drive growth in FY20 25 to be slightly higher than the implied Q4 exit rate. But right now, I think you should look at the exit rate, consider the macro, and take all of that into account as you're modeling. Thank you. We'll move on to William Power with Baird. Great, thanks. You're- Maybe a quick couple quick follow-ups. I guess, Eric, to an earlier question on AI Companion, can you just talk about, you know, where you're seeing the greatest usage? I mean, what are customers most focused on, and what's the early feedback look like? And what are customers asking for in AI? Where can you continue to add more value there? Yeah, it's a great question. First of all, you know, AI Companion is includes a lot of features like, hey, if you are late to the call, you wanna understand what's going on, you know, what kind of, you know, the point I missed, and so on, so forth, you can quickly ask, right? You know, all those kind of features. And also, you know, use our, you know, team chat. It can help you compose your chat solution, and a lot of features are built up upon that, right? So, and one of the key features customer really like is very straightforward, for sure, is the meeting summary, right? And after the meeting is over, you know, we not only do we generate a, you know, sometimes record a meeting, for now, you do not even record a meeting anymore. You just record a summary, and that feature works extremely well. We do see among a lot of other features customer already started in the building. I think this one probably one of the highlights. You know, it's very easy, you know, to use, and you see the very, very, you know, obvious, you know, ROI, right, to enable that feature. So again, it's a lot of other features as well, and, you know, like for me, I also use, you know, our email client. You may connect any other services, you can, right? You can help you compose email as well, right? It's just a lot of features, right? You know, and down the road, very soon, with the whiteboard, with, you know, AI Companion as well. Almost every service, entire platform, we're gonna leverage AI Companion. So and, a lot of features, so, you know, and, and the AI Companion. Yeah, great. Thank you. Make sure actually you, you enable, you know, meeting summary and explore so many features. I'm pretty sure you love that. So we got a lot of very positive feedback from those early adopters. Yeah. Our last question is going to come from Stephen Bersey with HSBC. Steven, if you wanna go ahead... Oh, I believe Stephen just disconnected. Oh! Steven, are you still out there? If you are not, I don't- Maybe difficult. I think Steven is no longer with us. So you know what, Eric? I'll just turn it back to you for closing remarks. Yeah. So first of all, thank you all for your time to join our Q3 Earnings Call. I really appreciate it. Wish you all and your families have a wonderful holiday season. Thank you again for your great support. Thank you. Thank you so much, Eric. Kelly, do you have any- And again, everyone... Oh, I apologize, Kelly. Again, everyone, this concludes today's earnings release. As Eric and Kelly mentioned, we thank you all for your participation, and from our family to yours, may you and yours have a safe and happy holiday season. Enjoy the rest of your day.