CEO Zooms through the bad news on Q2 earnings call
Alienating FOSS community and some employees? Web-based collaboration biz delights shareholders
In between upsetting some in the open source community and its own workforce, Zoom managed to crank out a set of financials that show it might be more than just a web conferencing flash in the pan.
Zoom has faced fierce competition from rivals including Cisco's Web Ex and Microsoft's Teams, along with a slowdown in demand for its services as some businesses ask staff to return to the office.
Ironically, they did the same recently, ordering employees living within 50 miles of an office to travel in for two days a week. Those who live within reaching distance of London are even getting an "engagement hub."
So how did Zoom fare in calendar Q2? It reported revenue of $1.138 billion, up 3.6 percent year-on-year and $24 million higher than forecast – a far cry from the double digit leaps in sales percentages the company booked between 2021 and 2022.
Zoom signed a cool $659.5 million in Enterprise revenues, up 10.2 percent with a total count of 218,000 enterprise customers, up 69 percent, and 3,672 contributed more than $100,000 in trailing 12 month revenue, up 18 percent.
Americas grew 6 percent but EMEA and APAC declined 1 percent each based on unfavorable forex.
The company didn't break down revenue by products but spoke extensively on an earnings conference call about – surprise, surprise – AI after recently hiring Xuedong Huang, Azure AI chief tech officer from Microsoft.
"Dr. XD joins us at an optimal moment in our AI journey," said Eric Yuan, CEO at Zoom. "In the past few months, we brought several new AI innovations to the market and announced an aggressive roadmap aimed at empowering our customers to work smarter and serve their customers better."
In March, Zoom updated its Ts&Cs to insert section 10.4, which meant it could use "customer content" royalty free to train machine learning models. Zoom rowed back after a backlash, but still upset some FOSS folk.
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With no hint of a smile, Yuan added: "By putting customers' privacy needs first, Zoom is taking a leadership position in ensuring customers can use our AI features with confidence that their content is protected."
Recent additions to the portfolio include Zoom Scheduler to "reduce the hassle of scheduling with people outside your organization," and Intelligent Director, which uses AI and multiple cameras to get the "best image and angle of participants joining from a conference room." Asynchronous video confabs were enabled via Zoom Clips.
Yuan said more paying punters are jumping onto Zoom Team Chat – aided by unified comms and collaboration platform Zoom One and features including Continuous Meeting Chat.
The team behind the Workivo app are being rapidly integrated into the business, he added.
In bringing more services to the fore, Yuan reckons customers that used one service have an appetite to buy more, all based on one platform.
For the quarter, total expenses fell to $694.5 million from $704 million, no doubt aided by the workforce reduction Zoom confirmed earlier this year. Profit from operations was $250.4 million from $90.4 million.
Based on the trading output, Zoom increased its revenue forecast for the financial year as high as $4.5 billion, up from the $4.48 billion it mentioned in May. The stock market reacted positively with the share price spiking 7 percent. ®