Hello, everyone, and welcome to Zoom's Q4 FY 2024 earnings webinar. As a reminder, today's webinar is being recorded. And now, I would like to hand things over to Tom McCallum, Head of Investor Relations. Thank you, David. Hello, everyone, and welcome to Zoom's earnings video webinar for the fourth quarter and full fiscal year 2024. I'm joined today by Zoom's founder and CEO, Eric Yuan, and Zoom's 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 that, 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 first quarter and full year 2025, 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 financial performance and financial results, which we discuss in detail in our filings with the SEC, including our 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 just turn the discussion over to Eric. Hey, thank you, Tom. Thank you, everyone, for joining us today. In FY 2024, we made a tremendous amount of progress towards our mission of one platform delivering limitless human connection. As generative AI began to take the world by storm, we listened carefully to customers in order to deliver AI that can best serve their needs, with innovation that is responsible, empowering, and built from the ground up in a way that permits and unifies our entire platform. Zoom AI Companion, our generative AI assistant, empowers customers and employees with enhanced productivity, team effectiveness, and skills. Since its launch only five months ago, we expanded AI Companion to six Zoom products, all included at no additional cost to licensed users. But we are far from done. Our future roadmap to AI is 100% guided by driving customer value. We are hard at work developing new AI capabilities to help customers achieve their unique business objectives, and we will have more to share in months at Enterprise Connect. We hope to see you all there. Our expanding Contact Center suite is a unified AI-first solution that offers tremendous value to companies of all sizes seeking to strengthen customer relationships and deliver better outcomes. The base product includes AI Companion, and our newly launched tiered pricing allows customers to add specialized CS capabilities, such as AI Expert Assist, workforce management, quality management, virtual agent, and omnichannel support. Boosted by its expanding features, our Contact Center suite is beginning to win in head-to-head competition with the legacy incumbents. Beyond that, it is competing on its own merits with customers completely new to Zoom, broadening the funnel to the Zoom platform. As Zoom becomes a full workplace solution, we are seeing customers migrate from other chat products onto Zoom Team Chat. Very excited. Over the past year, Zoom Team Chat usage has increased 130% across our paid accounts, and our migration tool, designed to simplify the transition, has seen a 4x increase in downloads in the last six months. Customers across industries are moving to Zoom Team Chat, including a global supply chain leader, who has migrated over 1,200 users, a major law firm, who has migrated 1,500 users, and also a financial payments leader, who has moved over 2,000 users. Customers appreciated the improved user experiences and enhanced collaboration driven by the Zoom Team Chat product, as well as the cost efficiencies realized by consolidating their communications and collaboration solutions onto Zoom. Last April, we acquired Workvivo, and its integration into the Zoom interface has strengthened its market position. In Q4, we observed a Fortune 10 company and a long-standing Zoom customer on Workvivo, making it Workvivo's biggest customer to date. On the flip side, we also saw a global bank, who started as a Workvivo customer, adopt the broader Zoom platform.... As you can see, adding new products, both organically and inorganically, creates a virtuous cycle, allowing us to sell more product into our large base. We were very pleased to see Workvivo recognized as a leader by Magic Quadrant in its first report on intranet packaged solutions. Similarly, Zoom Revenue Accelerator was recognized as a strong performer in The Forrester Wave, in its first year of being covered. An amazing testament to its value as a powerful AI-enabled tool, driving value to sales teams. FY 2024 was a difficult year from a macro perspective, and we faced those challenges head-on. We became more disciplined and focused while continuing to prioritize growth opportunities. As a result, we are much better positioned than we were one year ago. Our platform moat is deeper, our contact center offering is more robust, and our go-to-market teams are primed with defined goals and a sharp expertise to drive growth and empower our customers. Now, let's talk about some of our amazing customers. First, I'm so excited to welcome Broadcom, a global infrastructure technology leader, to the Zoom family. Recognizing the simplicity and ease of use of our expanding platform, they opted for the Zoom One Enterprise bundle to modernize the way they communicate and collaborate. Let me also thank Diageo, a leading global beverage company, for doubling down on Zoom. Seeing strong value from their existing meetings, phone, and rooms deployment, in Q4, they expanded to Zoom Contact Center and Zoom Virtual Agent. Let me also thank Community Financial Credit Union, a full-service financial cooperative, for investing in our broader Zoom One platform. They have chosen to modernize member engagement with the Zoom Contact Center. Community Financial chose Zoom because of our One platform video-first approach to solving all their communication needs. Zoom's integrations with key banking solutions through our APIs and partnerships were core to their decision-making process. Finally, let me thank Convera, the world's FX payments leader. Zoom Phone was the foundation of their Zoom engagement, and from there, they adopted the wider Zoom One platform in less than two years. Seeing the benefits of the tight integration of our products and powered by AI Companion, they recently began to deeply leverage Zoom Team Chat in order to streamline the pre, during, and post-meeting communication, all within the Zoom platform. Everything we do here is rooted in our culture of delivering happiness. This is why our employees, this is why the customer employees, this is why employees in modern IT departments are our biggest champions. Of course, happy employees are the most productive, so choosing Zoom becomes a win for everyone. We are laser-focused on our mission and could not be more optimistic about our future. The best is yet to come. With that, I'll pass it over to Kelly. Thank you. Thank you, Eric, and hello, everyone. Let me start with a few of the financial highlights for FY 2024. We were pleased with our strong finish to the year, with enterprise revenue growing 9% and free cash flow up 24%. We also achieved a non-GAAP operating margin of 39.2%, up 326 basis points from 35.9% in FY 2023. In Q4, we saw traction in our emerging products, including a nearly 3x increase in Zoom Contact Center licenses, as we not only added a significant number of new customers, but also expanded average deal size. Zoom Phone customers with 10,000 or more seats grew 27% year-over-year to 95. Zoom AI Companion has grown tremendously in just five months, with over 510,000 accounts enabled and 7.2 million meeting summaries created as of the close of FY 2024. We are excited about the strong growth across these new products and the benefits they drive for our customers. Now let's dive into the financial results. In Q4, total revenue came in at $1.146 billion, up 3% year-over-year. This result was approximately $16 million above the high end of our guidance. Our enterprise revenue grew 5% year-over-year and represented 58% of total revenue, up from 57% a year ago. We continue to see improvement in online average monthly churn, which decreased to 3% from 3.4% in Q4 of FY 2023. This is consistent with the previous quarter and the lowest churn we have ever reported. The number of enterprise customers grew 3% year-over-year to approximately 220,400. Our trailing twelve-month net dollar expansion rate for enterprise customers in Q4 came in at 101%. We saw a 10% year-over-year growth in the upmarket as we ended the quarter with 3,810 customers, contributing more than $100,000 in trailing twelve-month revenue. These customers represented 30% of revenue, up from 28% in Q4 of FY 2023. Our Americas revenue grew 4% year-over-year, while EMEA was flat and APAC declined by 3%. The international performance was partially due to the FX headwinds in APAC, as well as the impact from our sales reorganization in early FY 2024 that took longer to complete internationally than domestically. 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, income tax benefits from discrete activities, and all associated tax effects. Non-GAAP gross margin in Q4 was 79.2%, which was slightly lower than 79.8% in Q4 of last year, mainly due to our investment in AI Companion. In FY 2025, we expect our gross margin to be approximately 79%, reflecting focused investments in our AI features. Over the course of FY 2025, we expect to directionally improve gross margin towards our long-term target of 80% as we continue to optimize our data center strategy and grow some of our higher ASP products, like Zoom Contact Center. Non-GAAP income from operations grew by 10% year-over-year to $444 million, exceeding the end of our guidance of $414 million. This translates to a 38.7% non-GAAP operating margin for Q4, an improvement from 36.2% in Q4 of last year. Non-GAAP diluted net income per share in Q4 was $1.42 on approximately 313 million non-GAAP diluted weighted average shares outstanding. This result was 27 cents above the high end of our guidance and 20 cents higher than Q4 of last year. Turning to the balance sheet, deferred revenue at the end of the period was $1.27 billion, down approximately 3% from Q4 last year. This was roughly three percentage points better than the high end of the range we provided last quarter. For Q1, we expect deferred revenue to be down 4% to 5% year-over-year. Looking at both our billed and unbilled contracts, our RPO increased 4% year-over-year to approximately $3.57 billion. We expect to recognize approximately 58% of the total RPO as revenue over the next 12 months, as compared to 56% in Q4 of last year. Operating cash flow in the quarter grew 66% year-over-year to $351 million. Free cash flow, cash flow grew 81% year-over-year to $333 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 30.6% and 29%, respectively. We ended the quarter with approximately $7 billion in cash, cash equivalents, and marketable securities, excluding restricted cash. Turning to guidance. As we consider our view for Q1 and FY 2025, we have not assumed any changes in the macroeconomic outlook. For Q1, we expect revenue to be approximately $1.125 billion. This incorporates two fewer days in Q1 and would represent approximately 1.8% year-over-year growth. We expect non-GAAP operating income to be in the range of $410 million to $415 million. Our outlook for non-GAAP earnings per share is $1.18 to $1.20, based on approximately 316 million shares outstanding. For the full year of FY25, we expect revenue to be approximately $4.6 billion, which represents approximately 1.6% year-over-year growth. We expect Q2 to be the low point from a year-over-year growth perspective and to accelerate from there. We expect our non-GAAP operating income to be in the range of $1.72 billion to $1.73 billion, representing an operating margin of approximately 37.5%. Our outlook for non-GAAP earnings per share for FY 2025 is $4.85 to $4.88, based on approximately 321 million shares outstanding. For FY 2025, we expect free cash flow to be in the range of $1.44 billion to $1.48 billion. We believe that our strong cash flow generation and financial discipline, coupled with responsible capital allocation, is a powerful combination. As indicated in our earnings press release today, our board has authorized a $1.5 billion share repurchase program that we will start executing this quarter. This not only underscores the confidence our board and management team have in the future of Zoom, but also allows us to leverage our strong profitability, cash flow, and balance sheet to drive shareholder returns, while also allowing us the flexibility to consider M&A options to accelerate growth and deliver for our customers. As a note, the share count and EPS metrics in our guide do not account for the impacts from the shareholder repurchase program. To echo what Eric said, we are optimistic about where we are now and where we are going. Our competitive position, innovation engine, and customer base set us up for success in FY 25 and beyond. Thank you to the entire Zoom team, our customers, our community, and our investors for your trust and support. Before closing, I would like to thank just one more person for their support over the years. Our head of IR, Tom McCallum, has decided to retire this summer after a seasoned 25-year IR career. Tom, it's been an honor and a pleasure to work with you. You have contributed tremendously to Zoom's success since even before the IPO, and will be dearly missed. Thank you so much for all you have done, and congratulations. I am pleased to announce that Charles Eveslage, who has worked with Tom and me for several years now, will assume the role. With Charles at the helm, we are confident that the investment community will continue to receive a high level of service from our IR team. Please hold your goodbyes for Tom for now, as he will be with us until midyear to ensure a smooth transition. With that, David, 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. Our first question comes from William Power with Baird. Okay, great. Thanks. I guess, well, Kelly, you said to hold this for Tom, but Tom, I wanted to just say thanks—for all your help over the years. Kelly, maybe to just kick it off with you, as we look at guidance, maybe just talk about what's providing confidence that the year-over-year growth should trough in Q2, if I heard you right. Yeah. How do we think about the key drivers then to perhaps accelerate year-over-year growth in the back half of the year, and perhaps into fiscal 26? How do we think about, you know, that trajectory over the ensuing 18 months, maybe as you get past that? Yeah. So when you think about, you know, coming down in Q2 but then accelerating the back half, this is the culmination of what we've been talking about for a while, which is the growth being driven by Zoom Phone, by Zoom Contact Center, which we've seen continue to mature, by the effect that AI and adoption of Team Chat are having on the overall retention metrics of the company. So all of those factors is what gives us that confidence that we're going to see it come down in Q2, but then start to re-accelerate after that. And then, I mean, it's very early to comment on FY 26, but, you know, that will be an indicator. That exit rate for FY 25 will be an indicator for FY 26. Okay, thank you. Thank you. Our next question comes from Meta Marshall with Morgan Stanley. Hi, Meta. Great, thanks. Just wanted to ask, maybe just in terms of, on the deferred revenue, you know, in the past quarter, you mentioned that deferred revenue would kind of be down a quarter, or we saw it come down. And just wondering, last quarter you had talked about the terms that you were seeing of people extending their deals come in a little bit. Just any trends that you're seeing just in terms of renewals, and what you're kind of seeing in terms of renewals, either in terms of, you know, products that they're adding, but just also maybe term compression they might be seeing? Thanks. Yeah. So we've continued to see strength in renewals. Our, you know, huge thanks to our renewals team in Q4, actually they did an amazing job of exceeding their target, which was great to see. And what we have seen is the continued trend of our customers wanting shorter payment terms. They're hanging on to their cash. Remember we talked about this in Q3, that that's really what contributes to the decrease in deferred. And then the other thing is the timing of renewals. We are seeing customers not necessarily wait to their renewal period to start these discussions. For example, I reviewed a proposal today for a customer that's not gonna renew for six months. So customers are really thinking ahead about their contracts and being very thoughtful about this. What that does, it creates some variability in both the RPO and the deferred, because it's very sensitive to the timing of these things. Great, thank you. Thank you. Our next question comes from Ethan Bruck, from Wolfe Research. Hey, guys, congrats on these results, and I'm gonna ask a question on behalf of Alex here. Hi, Ethan. So, uh- Yeah ... hey, so I guess my question would just be on a little bit back on the guidance for fiscal 25. Just if you can give a little, some puts and takes. I know you said you're not factoring macro improvement, but how should we think about both the enterprise and online piece? I know you guys are rolling out some pricing increases, so maybe how to factor that going into numbers for next year. And just also, you know, the NRR piece, maybe roughly when you're expecting that to trough. Just any color on that would be great. Yeah. So in terms of the enterprise or the direct sales organization, we kind of touched on this in the prepared remarks, but, you know, they, they're off to a fast start this year. We're really excited about that. If you remember last year, we had not only the overall reduction in the company, but the sales reorganization, which took a lot of time for the organization to recover from, frankly. And so seeing them, you know, well-positioned to start off this year strong is really exciting to see, and that's certainly gonna contribute to the overall growth that we're expecting to see, especially in the back half of the year. And then from an online perspective, you know, really pleased, for example, with the Q3 churn metric. I think considering that we typically see seasonally higher churn in Q2 and Q4, that churn rate holding from Q3 to Q4 at that lowest rate of 3.0 is really indicative of all the improvements that team has made to the platform, the ongoing initiatives they've put in place, and so all of those considerations is what gives us confidence around the FY25 guide. Got it. That makes sense. And just a quick follow-up, it's just around some of the AI, like you're successfully, you know, embedding it across the platform. I'm just curious, as we think about kind of the monetization angles over the next few years, I mean, if you were to stack rank where you think the combination of moving, moving users to higher SKUs, matching price to value, which you guys are obviously already doing, or getting folks to adopt, you know, more products on the upsell side, into contact center, for example, just here's how you guys are thinking about that right now. Yeah. Yeah, sure, I can take it. So, and, we are monetizing AI on many fronts. You look at our, you know, Zoom AI Companion, right? So first of all, you know, for our existing, you know, customers, because they all like the value we created, right, to generate a meeting summary, meeting query, and so on and so forth, because, you know, because of that, you know, we do really do not... 'Cause customers are also trying to reduce the cost. That's why we do not charge the customers for those features. However, a lot of areas we can monetize, you know, like take our, you know, AI Companion, for example. Enterprise customers, how to leverage enter- enterprise customer dictionary, their source data, and also to build a, you know, tailored, you know, the, the, Zoom AI Companion for those customers. You know, sort of like a customized Zoom AI Companion, and we can monetize. And also look at all the services. You know, maybe I just take a contact center, for example. We are offering now a Zoom Virtual Agent, you know, that's one way to monetize, and recently we announced, you know, three tiers, you know, of Zoom Contact Center product. Right? The last one is, you know, is per agent, per month, is we charge $149. The reason why, a few features. One of the feature is AI Expert Assist, right? All those features are empowered by AI features. Not to mention, not to mention, you know, we are also going to build new services, and are driven by Zoom AI Companion as well. I think this year, I know we are going to doubling down on Zoom AI, AI Companion customization, and also focus on monetization. That's our effort, so... Got it. Thank you, guys, and congrats on the results. Appreciate. Say hello to Alex. Our next question comes from Tyler Radke with Citi. Thank you for taking the question, and apologies for the quality. I'm in transit at the moment. Wanted to ask you about the recently announced buyback. You know, $1.5 billion is impressive, 7% of your shares outstanding. But I guess what... How'd you kind of come up with that number, and does that signal anything about the size of potential M&A that you're hoping to do? Anything that you could just share in terms of why now, and the decision process would be helpful. Thank you. Yeah, so, you know, we've talked about this many times in the past. Every quarter we have this discussion about capital allocation with our board, of course, with Eric. And, you know, with $7 billion sitting on our balance sheet today, and the strength of our cash flow outlook for FY25, we feel confident that, you know, having an authorization in place does not preclude us, and still provides us plenty of flexibility to do M&A transactions that we might see as exciting in the future. And we continue to look for any opportunities that make sense to bring another organization to the Zoom portfolio. And we're targeting an amount that would, you know, approximately, offset potentially most of the dilution for FY25, and that's how we're thinking about it. Of course, you know, you just did that quick calculation of math, but there's always variability in the execution of these programs. And, we will be looking... The way that we execute it is we set an approximate amount we want to acquire every single quarter, so we'll be evaluating this as we move through the year this year. Okay, our next question comes from Tom Blakey, from KeyBanc. Thanks, everyone. Good to see you, Eric and Kelly. Congratulations on the, I'll say early retirement, Tom. You know, just point of clarification first, Kelly, on I think Meta was asking about, 2Q and the guide, and you mentioned something about being down. Were you implying, just point of clarification, that fiscal 2Q would be down quarter on quarter from fiscal 1Q? We're saying that the year-over-year growth rate in Q2 will decline as compared to the year-over-year growth rate. Down. Okay ... in Q1. Yes. Okay. It will be positive. It won't be, you know, it's not gonna go negative, based on our current outlook, but it will be lower than the year-over-year growth rate in Q1. Sorry, sorry for the handholding there. And just to- No, no, it's okay. My key question would be on the CCaaS. Sounds like you're off to a great start. You know, there's a lot of demand out there. You're hearing from your peers. I would love to just, you know, give you the opportunity to talk about pricing, uptake of some of the, you know, the virtual agent, agent assist, you know, functionality, and maybe any type of, you know, what you baked into fiscal 2025 in terms of visibility here, as you've come out very strong here in the fourth quarter, into fiscal 2025. Thank you. Eric, do you want to talk about contact center in general for a minute first? Sure. Absolutely. I think, Tom, you may not know, actually, recently I got a new job here at Zoom. I become the contact center general manager. All the product management team, engineers, and our go-to-market team, sales, marketing, they all report to me directly. That means huge opportunity ahead of us. Why I want to be another head of a GTM contact center? Seriously, but anyway, so based on customer feedback, very, very positive. We're doing extremely well, you know, every quarter. In Q4, number is amazing. Plus, the reason why we have a confidence introduce, like, three tiers of pricing, because a lot of the customers told us, right? They probably needed a very basic contact solutions. You know, the $69 per month per agent, very competitive, all the cool features. Or if they want some, you know, social channel, maybe, you know, auto dialer, they can, you know, pay another $30 more per agent. And for a huge enterprise customer, one buys a thousand agents, and we give them the Zoom, you know, Expert Assist, and also workforce management, quality management, all the features. You can see Zoom has become a full suite of contact center offering. We can compete head-to-head to any legacy incumbents. I'll give you one example. Zoom, we internally, we deployed, you know, our virtual agent. Guess what? Every month, we saved 400,000 agent hours, and more than 90% inbound inquiries can be done by our virtual agent, driven by the AI technology. Very excited about everything we are doing, and the feedback is very positive. You know, again, we are going to doubling down, tripling down on our contact center offering, because that's a modern solution, AI-powered, video first, and have also we build a full suite. That's why we are so excited. I think based on your enthusiasm, Eric, I'm gonna raise your quota. Yeah, I raise the quota to sales team every day, so that's no difference, so... Kelly, what kind of, you know, where, what kind of outlook are you baking in, in terms of the strength there and the visibility commentary about fiscal 2025? And then is that- Yeah. This is just enterprise right now, right? This is the, there's no self-service online here, right? Correct. Not yet, but, you know- Yeah ... now it's just, yeah, you, you're so right on, see? Yeah. Thank you for helping us to monetize, you know, contact center in another way, so. Yeah, so Tom, we looked at, you know, the trends that we've been seeing, the number of customers, the growth rate, the size of the deals, which have been expanding over the last several quarters, and just, and of course, sales capacity, and taking all of that into consideration, including the new pricing tiers, that's how we built our outlook for FY 2025. Thank you. Yep. Okay, thank you. Our next question comes from James Fish with Piper Sandler. Hey, guys. Thanks, thanks for the question here. Tom, congrats on the announcement, and Eric, good luck with the increased quota from Kelly now. Kelly, just going back to a couple questions ago, on how to think about the quantitative approach here on past or future price increases on the guide for this year. And for Eric, you know, what's causing customers to move over to the Zoom chat function and off your main competitor, like Teams? Just further consolidation onto one platform, or is it AI companion playing a larger role here, especially as you guys are including it, as opposed to, you know, $30, $35 a month? Thanks, guys. Kelly, you want to take it first one? No, you go ahead. You go ahead first. Sure, sure. So James, one thing I think we did not do well, as I mentioned even before, is we did not do well on marketing front. A lot of customers, users, they do not know Zoom has a great persistent and team chat functionality at no additional cost. And it works extremely well. All the key features, any other competitor's product they have, we also have that as well. Very well integrated with Zoom, you know, product. And plus, as you said, you are so right on. You know, customers, they see, they're using their chat solution, they want to use the AI. Like, say, you know, I send you a message, I send you a message, I want to allow the AI, send a long message. However, you know, if you use other solutions, sometimes other solutions itself, even with all AI, is not free, right? And in our case, not only our core functionalities, but also AI Companion building, also at no additional cost. I can use it. For any users, customers, you already have a meeting license, Zoom Team Chat, Team Chat already built in, right? You know, all the key core features, you can use the Zoom AI Companion, you know, to let the AI, you know, write a chat message, and so on and so forth. It works so well at no additional cost. The total cost of ownership of Zoom Team Chat is much better than any other team chat solutions. And also, we built a native client, not like some other, you know, competitors. The web-based client is sometimes, you know, like I'm using Mac, and performance, so on and so forth, is really not good in a clunky experience. That's the reason why more and more customers, they discover the Zoom Team Chat capabilities, say, "Wow, why not move to Zoom platform? They give you the team chat functionalities at no additional cost," right? That's the reason why, you know, we have a confidence. I, I hope more and more customers, they are gonna move to the Zoom Team Chat. We also build a very similar migration tools as well, to help a customer migrate to Zoom Team Chat. Thank you, Eric. In terms of the price increases, James, so certainly the online price increases that we talked about last call and that were implemented in Q4 are in all of our forward-looking guidance. And then, you know, the renewals team, as they're talking to our customer about renewals, where there are opportunities for price increases, we've seen those trends over the last few quarters, they've been doing that, and that would also show up in the pipeline that the team has out there. So in that context, it's also been considered. Yeah. Go ahead, please. Yeah, by the way, James, and all the analysts that are here, you know, if you are logging in with the Zoom client, you know my email address. We can create a Zoom Team Chat group, and let's get a first-hand experience. You know, how powerful it is, so it's very easy, so- You can have one-on-one access to Eric, James. Yeah. Pleased to help you. Sounds good, Eric. Don't worry, I won't annoy you too much. Awesome. Thank you, James. Thank you. Our next question comes from Matthew VanVliet with BTIG. Hey, good afternoon. Thanks for taking the question. I guess one more on the contact center. Curious in terms of how the mix is maybe different with channel involvement and partners being involved in those deals over the last couple of months as you've really invested in the channel program. And then secondarily, what is the mix of the contact center sales into existing customers, especially existing Zoom Phone customers? Is that any different than the early days of Zoom Phone in terms of mix? Thanks. Yeah, so, Kelly, feel free to chime in. I think, you know, for the core meeting product, by and large, it's directly driven, and Zoom Phone is, you know, mixed, right? Direct and those channel driven. You look at the contact center product, for sure we have a Zoom Contact Center specialist here. But I think primarily driven by a lot of, you know, and the very well established, you know, the third-party, you know, agents, right? And those are channel partners, for they already have a great relationship. We haven't invested into that area. So, you know, and that's the reason why a lot of deals are brought, you know, to us by those, you know, the channel partners. Some of them even never used the... They are not Zoom Meeting customers, but also they've become the first Zoom Contact Center customers. So that's kind of, you know, channel and also the Zoom Contact Center specialist. Also at the same time, you know, because Zoom Phone and the Zoom Contact Center, you know, we integrate very well, and also we are training all those Zoom Phone specialists, also to become a Zoom Contact Center specialist, right? To further help our, you know, internal sales, you know, capacity as well. And I think that overall, and you look at the revenue trajectory, and Kelly, correct me if I'm wrong, is very similar to our Zoom Phone growth. Yeah. Hopefully, after I become GM, maybe we can beat that as well. So, anyway, that's where we are now, so. Yeah. The only thing that I would add to that is, you know, we're very excited. We hired Chris Morrissey in November. He is, you know, a veteran in this space, so really excited to have his talents here at Zoom. And then one other thing to note, which has been interesting about Contact Center, is we actually have seen customers, new customers, coming for Zoom Contact Center. So it's also an opportunity to start to bring, you know, expose the platform to new prospects and customers as they're really excited about, you know, this really modern technology that we have in Zoom Contact Center. Yeah. By the way, Chris- Thank you. Yeah, by the way, Chris reports to me directly. He came from, NICE, so NICE inContact, so. All right, great. Thanks. Thank you. Thank you. Our next question comes from Siti Panigrahi with Mizuho. Hi, Siti. Thanks for taking my... so I want to ask the other growth driver you have, phone, on the phone side. So help us understand, like, what's your penetration right now within the installed base on the phone side, and any update in terms of, you know, whether the number of seats or revenue you have by end of this fiscal year? Yeah, so we are really excited about the ongoing strength and growth in Zoom Phone. In terms of the opportunity ahead, even internally, the penetration rate for deal attach is still under, I think, 20%. So that just highlights there's lots of greenfield, even within our existing Zoom customer base. And the metric that we gave this quarter was that customers with greater than 10,000 seats increased 11% year-over-year, or 27%... Sorry, 11% was like quarter-over-quarter, 27% year-over-year to 95. So seeing lots of strength in that high end of the customer base, which we're really excited about. And we didn't give a seat count metric this quarter. It's probably something that we'll do in the next quarter or two. Great, thank you. Yeah. Okay, thank you. Our next question comes from Arjun Bhatia with William Blair. All right, thank you. Maybe going back to the contact center piece and trying to loop in the AI Expert Assist side, when you're seeing customers come in, are they adopting the premium tiers off the bat? And do you have a sense of whether, you know, the usage of Expert Assist is ticking up as a result, or is this something that we should think of as a future upsell driver, as customers kind of land maybe at the low end and then expand over time? Yeah, that's a great question. The reason why we introduced the multi-tiers for a contact center, because we really look at it from a customer perspective. Each customer, they have a totally different demands or requirements. And sometimes, you know, they, they do not care about, you know, and the social media channel, right? They just need a call, you know, functionalities, right? Just a few hundred seats, and they migrate from other cloud-based contact center solutions, really, they don't need a workforce management or quality management, right? That's the reason why, you know, we have a suite here now, right? You know, quite often for, you know, the SMB customer, you know, I think, you know, a Zoom Contact Center Essentials is good enough.... right? And we talk with, you know, the customers, you know, with more than 1,000 agents. You know, for sure, they would like to have those AI Expert Assist in the workforce management or quality management, so on, so forth, right? That's the reason why, you know, because, you know, customer demand, we have a multiple tiers, you know, and our contact center specialists and also partners, channel partners working together, right? Based on customer demand, we'll offer different tiers. We might introduce more in the future, we do not know. But again, we look at everything from a customer perspective. That's the reason why based on the those multi-tiered packages, you can see that, that the demand are coming from, you know, and every segment, SMB customers, a lot of enterprise customers, and it's very healthy, so. To just further what Eric said, the packages are off to a really great start. We've had approximately 3,700 licenses sold in those upper tiers, and the ASP for those is double what our existing ASP was before we introduced those additional tiers. So it really shows you how this is gonna not only, you know, address a broader market, but also accelerate our revenue growth here. Yeah. Perfect. Used to be a little bit over 50, now it is 100. Yeah. This is a great result, so. Yeah. Yeah. Great to hear. Awesome. Thank you. Thank you. Okay, our next question comes from Taz Koujalgi with Wedbush. Hi, Taz. Hi, how are you? Thanks for taking my question. I have a question on the guide for next year. Kelly, how do you think about the breakdown between enterprise growth and online for next year? Should we see online start growing year-over-year in 2025? Yeah, we aren't gonna give specific guidance for the segments, but we are really focused on continuing to have stabilization in the online segment, which you saw, you know, happen again this quarter. Actually, both quarters, you know, both segments were slightly up in Q4, which was great to see. And really focusing on the initiatives to drive, basically stabilization is how I would think about it for FY 2025 in the online segment. Got it. Thanks. And then one follow for Eric. Eric, you mentioned increasing deal sizes for Contact Center. Can you compare when a customer buys Zoom Phone and buys Zoom Contact Center, are the deal sizes a lot different? Similar, because the ASP is a lot higher for Contact Center, but I, I'm guessing the seat count is lower. How does the seat, the deal values compare between Phone and Contact Center? I think, that's a great question. I think for sure, you know, I do not think I compare that with the Zoom Phone, right? Mm-hmm. You know, as Zoom Contact Center, as when we started, you know, normally we have a lot of accounts, but the average deal size is rather smaller. Now we see the average size of a deal is bigger and greater and greater, right? This is much better than before. And from that perspective, it's very different compared to Zoom Phone. Mm-hmm. Right? That's the reason why you look at our, you know, the Zoom One and the three package, right? And the earlier package is $149 or, you know, per user per month, per agent per month. It's much, you know, and bigger than the Zoom Phone, right? That's the reason why I think the in terms of pricing is very different. We see that more and more medium and large enterprise customers adopt Zoom Contact Center. You will see the average of the deal size is much bigger, and we do not focus on- Mm-hmm ... number of seats, number of customers, but focus on the size of customers. That's very healthy. Thank you. Thank you. Okay, our next question comes from Matthew Bullock with Bank of America. Hi, Eric and Kelly. Thanks for the question. I'll be asking on behalf of Mike Funk today, regarding Zoom's progress and roadmap for Contact Center product development. Can you provide an update on the company's near-term priorities in terms of functionality improvement? And then in the longer term, where is the company's focus to better position the offering for larger scale enterprise deployments? Thanks. Yeah, this is great. So first of all, you know, I want to tell you from architecture perspective, we are ready already for big, very, a very big large enterprise customers, in terms of number of concurrent agents, and we did a test. It works very well. For now, we just focus on the feature set. Again, we already have a lot of features. Most of the customers, they can deploy Zoom Contact Center without any problem, either migrate from legacy contact center solution providers or migrate from the other, you know, cloud solution providers. In terms of new feature, you know, I think the next few quarters, you know, like one big feature is, you know, PCI compliance, right? We, we need to support that, right? And also, how to support the channel partners, right? You know, and also all those features may not be the core features, but also, like PCI compliance, and also the support of the channel partners, right? All those features, you know, sort of like enterprise related. So we're also working on that, and also some like a workforce management and queue management, further enhance that, and also add a lot of AI features as well. I think as you can see, you know, core feature set already there. We just need to add a few here and there, and I think we are almost 100% ready. You know, like, even for a, you know, social media channel, we already support, you know, and the, you know, like, the social media channel, how to support more, you know, the channels, like WhatsApp, right? How to add WhatsApp there. It's just some, you know, corner feature here and there, you know, in the next few quarters. And yeah, this team working very hard on that, so. Super helpful. Thank you. Appreciate it. Thank you. Okay, our next question comes from Mark Murphy with JP Morgan. Mark, are you there?... Okay, we'll move ahead. Our next question- Wait, he just came off mute. There we go. Hi, Mark. Sorry, sorry about that. This is Arti Lin from Mark Murphy. Thanks for taking the question, and congrats on all the milestones. You mentioned in your prepared remarks about how AI Companion is integrated into your Contact Center suite of solutions. You know, in our discussions with industry contacts, those sort of applications for GenAI have been, you know, pretty scaled, pretty strong, and a lot of customer interest. Are you guys seeing a similar pattern with customers? Is that an area where you're seeing kind of an outsized interest or utilization of the AI tools? Thanks. Yes, I think it's very similar, right? You look at a Zoom Meeting product, right, and customers discover that, you know, Zoom AI Companion, you know, to help you with a meeting summary. And, you know, after they discover that feature, and they would like to adopt that, right? Contact Center, exact same thing. And like, you know, Virtual Agent and AI Expert Assist, right? Leverage those AI features, you know, manage the kind of, you know, what's going on, you know, in real time, and also... And the agent, right, can have the AI to get a real-time knowledge base and any update about these customers. All those AI features can, you know, dramatically improve the agent efficiency, right? That's the reason why, you know, it's kind of an... We not take a much longer time for those agents to realize the value of the AI features, because, you know, it's kind of very easy to use. And I think, in terms of adoption rate, I feel like a contact center AI, you know, adoption rate even probably, you know, faster than the other, you know, the core features, so core services. Thank you very much. Thank you. Okay, our next question comes from Matthew Harrigan with Benchmark. Oh, I'm sorry, I actually wasn't... I didn't have my hand up, but since you asked, do you have any thoughts on the relative macro strength you're seeing in different markets? You know, Pacific Rim, Japan. Obviously, Buffett was just extolling the virtues of Japan as an investment area right now, you know, Europe, U.S., et cetera. Thank you. Yeah, we, we agree. We see Japan as certainly a very important market for us, and it is a core focus for FY 25, is reinvesting and reinvigorating our, our go-to-market teams in both EMEA and APAC. We have, new leadership in, in some of those markets and are really excited again about the quick start, the teams being in market, and, and we're ready to go and look forward to great things from them this year. Great. I'm very fast off that mute button, since I wasn't expecting to be called on, so I probably actually get brownie points for that. Thank you. Good job. Good to see you, Matthew. Thank you. Thanks. Thank you. Our next question comes from Peter Weed with Bernstein. Thank you very much. I really appreciate all the detail, and it's obviously pretty exciting news to see all the expansion opportunities going on with the enterprise customers, along with kind of maybe a floor coming in with the online customer group. I guess two follow-ups I've got around the enterprise customers. You know, I don't think you commented on how churn is evolving with those customers. And obviously, with continued tailing in NRR, I'm trying to unpack what portion of that's coming from churn versus what portion of that's coming from the kind of continued refresh cycle you have with, like, long-tenured customers that are still coming down on seats. And then the second part is, kind of you look through on that NRR, and you're talking about some acceleration going on later this year, and I think that's, you know, starting to mix in customers that no longer are those long tenure that have seats coming down, and it's really being replaced by, those that the expansion is, is really, in, in functionality is coming in. If you look at those customers that are kind of past their seat, you know, readjustment, how, how expansive are those customers, that, that we can maybe look forward to, you know, out a year or so being a, a greater portion of the, of the mix? Yeah. So it's a really good point, Peter. So we've talked about this a few times, but in FY24, we know we saw that the majority of our customers had a renewal event. So they had the opportunity to work with us as they needed to potentially rightsize their seat count. Again, our renewals team has done an amazing job of taking the opportunity to talk to them about the opportunity to upgrade to Zoom One, to potentially add in Zoom Phone or additional products, so maintaining that spend. So we've seen some shifting around in terms of the overall portfolio, but really focused on maintaining that spend. And what that does is it really situates us very well as those customers start to grow again, that, you know, the customers are now sitting in different SKUs that potentially are, more retentive and also at a higher price point, honestly, that they can grow into as they start adding seats again. We do see there's gonna be a much lower percentage of our customers that are up for renewal this year that didn't have a renewal event last year. So we've seen, again, the majority of our customers, if they had something to work through in terms of rightsizing, we've seen the majority of them have the opportunity to do that in FY 2024, so we expect that to have a much lower impact in FY 2025. The churn side of it, how much of the roll-off in NRR is because churn has gone up, or is it continuing to be what it has always been on the enterprise side, pretty, pretty stable? ... Yeah, Yeah, it's been pretty stable. We did, you know, we've talked about this, these customers that we're right-sizing. We, you know, you saw, given the reductions that we saw across our customer base, and you saw generally in organizations last year, there was some impact for that. But the churn rates themselves have been pretty stable. And you remember that our net RR number is a trailing 12-month metric, so you're likely gonna see a little more decline in that metric before it starts to re-accelerate again, along with our revenue that we're expecting to see at the back half of this year. Thank you. I appreciate it. Yeah. Okay, thank you. Our next question comes from Shebly Seyrafi with FBN Securities. Yes, so thank you very much. Adjusted for the two fewer days in Q1, you're guiding for 3.6%, say, 4% growth in Q1. And for the year, you're guiding for about 1.5% growth. I know you bottomed in Q2, but it seems like with a reasonable projection, you're still gonna be, like, 2% growth, roughly half the 4% growth in Q1 in the back half of the year, yet you're gonna have these new products ramping, the phone, the contact center, AI, et cetera. I'm trying to understand why you don't expect an adjusted revenue growth acceleration in the back half instead of the implied deceleration I get in my model? You know, we are guiding to 1.8% in Q1, so that's the outlook that we are giving. If you're backing into something different, but the guidance that we're giving, as a reminder, is 1.8%, and then 1.6% for the full year, with the decline that we are expecting from a year-over-year growth perspective in Q2. Well, let me be clear, but Q1 has a 1.8% hit from the two fewer days, so adjusted for that, it's 3.6% growth in Q1, right? So apples to apples, 3.6 goes down to something like 1% to 2% in the back half of the year, and you have new products ramping in the back half of the year. Yeah. So I'm trying to- Yeah, I- ... understand that. So, you know, as I mentioned in the prepared remarks, we are not assuming any improvement in the overall macroeconomic outlook, and/or changes significantly in terms of our international contribution. So all of the, that combined, we're taking what we believe to be an appropriately prudent outlook for the year. Okay, thanks. Okay, our next question comes from Catharine Trebnick with Rosenblatt Securities. Hi, thanks for taking my question. Much appreciated. Thanks, Catherine. So back to the contact center to beat a dead horse, it seems like there's this, a lot of the information I gathered was there's a big push for light contact centers, and it seems that Zoom fits that quite well with your pricing model. And when I say light, I mean those are non-agents versus agents. So do you have, like, a split for the quarter that you are willing to share? That would be agent versus non-agent. I'm just trying to get a good handle on that growth outside the traditional agents for license, 'cause there seems to be a good opportunity there. I think that direction-wise, you are so right. And on the one hand, you know, for the real human agent, they still need a modern contact center solution while working hard on that, replace legacy vendors, solutions or, or other cloud-based solutions. On the other hand, and it is, you know, more and more demand, you know, I think on the customers, they do not gonna deploy any human agent anymore, right? Collaborative virtual agent. I think that's the reason we also sell Zoom Virtual Agent as well. I think maybe, you know, in the next few quarters, and maybe you are ready to disclose that. For now, I do not think that we're ready to disclose that number. I can... But we focus on both side. Either you do not have more agent, you can have the AI, this is good, or you can buy more, you know, agent, and that's okay, too. So, yeah, that's our plan, so. All right, thank you. Thank you. Okay, our next question comes from Peter Levine with Evercore. Oh, great. No, thanks for squeezing me in. I'll just keep it quick. Kelly, you know, your comments on M&A, can you share with us what you're thinking in terms of inorganic contributions? I mean, inorganic contributions, but what area would you consider? Is it CCaaS? Is it, like, workflow collaboration? But any sense on kind of where you're thinking or how you're thinking about, you know, adding to the portfolio? Thank you. Yeah, we've been exploring opportunities actually across all of those areas, Peter. We, you know, look for opportunities to either accelerate what we, we already have, which would obviously be in the CCaaS space. And you know, a good example is what we did in the past with, with Solvvy around our Zoom Virtual Agent product, or something that sits a little bit next to it, which Workvivo is a great example of that as well. So we are continuing to look in areas both, you know, within our current portfolio, as well as around us with things like productivity tools. So that's, that's how we're thinking about it. Eric, is there anything you want to add? Yeah, you are so right on. Just either technology-driven or just to expand our TAM, or maybe double down our existing services. So, pretty much those three things. Yeah. We are very interested in all three, so. Thank you. Appreciate it. Thank you. Okay, we only have time for one more question, and that comes from George Iwanyc with Oppenheimer. Thanks for getting me in. Thanks, George. Kelly, maybe expanding on your comments on the sales side and the reorg, you know, how do you feel about your productivity in North America and internationally? And when you look at investing this year, you know, like, where, where are you putting the most effort? Yeah, so, you know, you saw in our, our results for Q3 and Q4 that we had re-acceleration and, and sales productivity in the back half of FY 2024, and again, off to a really fast start for FY 2025, so excited about that. We are investing in both direct and channel on a global basis, as it's, it's really important that we, you know, keep fueling the growth driver that we have here in North America, but also reinvesting and reinvigorating our international markets as well. All right. Thank you. Okay, thank you, everyone. This concludes our Q&A, and I would now like to pass things back to Eric for closing comments. Well, thank you all for your support. Thank you all for your time. Really appreciate, and see you next quarter. Thank you. Again, this concludes today's release. We thank you all for your participation. From our family to yours, thank you.