Zoom at Jefferies Conference: Strategic Shift to AI and Platform Expansion

On Wednesday, 28 May 2025, Zoom Video Communications Inc. (NASDAQ:ZM) presented at the Jefferies Public Technology Conference, where CFO Michelle Chang outlined the company’s strategic initiatives. The focus is on transforming Zoom from a meetings-centric company to a comprehensive workplace platform. While the company sees promising growth in AI integration and platform expansion, it faces challenges with enterprise deal scrutiny and sales elongation in the U.S.

Key Takeaways

• Zoom is evolving into a comprehensive workplace platform, expanding into customer and employee experience markets.
• AI is a core focus, with plans to monetize through vertical AI products and custom AI companions.
• Financial results exceeded expectations, with raised guidance despite challenges in the enterprise sector.
• Record buybacks signal Zoom’s commitment to returning capital to shareholders.
• WorkVivo platform shows strong growth, with 90% of customers new to Zoom.

Financial Results

• Q1 results surpassed expectations, prompting an increase in full-year guidance.
• A price hike for a subset of online customers is projected to generate an additional $10 million to $15 million in revenue.
• Enterprise sales in the U.S. faced deal scrutiny and elongation, impacting revenue growth.

Operational Updates

• Online churn is at a record low, with over 70% of customers with Zoom for more than 16 months.
• 49% of online billing is annual, indicating a stable customer base.
• Storage capacity for online customers has doubled, reflecting enhanced platform value.

Future Outlook

• Strategic priorities include accelerating growth and optimizing capital allocation.
• Zoom’s M&A strategy focuses on small to medium-sized acquisitions to drive top-line growth and strategic differentiation.
• The company’s contact center business is experiencing triple-digit growth, driven by omnichannel excellence and AI integration.

Q&A Highlights

• The balance between organic growth and the Meta partnership’s impact on WorkVivo was discussed, emphasizing the platform’s inherent value.
• Zoom’s contact center solution stands out for its rapid innovation and customer-centric approach, with a preference for integrated communication platforms.

In conclusion, Zoom’s strategic initiatives highlight a significant shift towards AI and platform expansion, positioning the company for future growth. For more detailed insights, readers are encouraged to refer to the full transcript.

Full transcript - Jefferies Public Technology Conference:

Samad Samana, Analyst, Jefferies: Hi, everybody. Thank you for joining us. I appreciate you joining. My name is Samad Samana. I cover Zoom here at Jefferies.

And with us we have Michelle Chang, who is the CFO joined Zoom last year and excited to have you here with us for the first time Michelle. You’re okay, it’ll just turn itself on. No problem. So listen, again, having you with us. You stepped into the role in the fall of twenty twenty four and you’ve been through a few earnings cycles now.

Maybe I think just for the audience given your fresh perspective on Zoom which is now essentially a household name, right? Like what attracted you to the role? And maybe what have your initial priorities been since joining Zoom?

Michelle Chang, CFO, Zoom: Yes. So to add a little bit more detail, I came in October. I’d actually spent 20 almost twenty five years at Microsoft where I actually was the CFO of Teams in the pandemic. So kind of saw Zoom from a very different vantage point and a couple other roles. But when Eric, our CEO, called me, it was sort of like, oh, you take the call because of Zoom, the iconic brand that helped the world in a tough time.

But as he and I and our conversations began to unfold, you know, it’s like, wow. I did not realize, you know like, you heard I heard from my predecessor, you know, all the things that made Zoom Zoom. They have an end user love. They’ve kept the customer at the center of it. So I knew that going in iconic brand.

But then as Eric began to talk about where the company was going, I just thought there was a really great fit in terms of what I’ve seen in terms of building growth at scale at Microsoft and frankly how I can help.

Samad Samana, Analyst, Jefferies: Great. And how do you think about maybe your priorities since joining? I know there’s been some new disclosures. I think there’s been maybe a bit more aggressiveness in the capital management. Just if you think about the top one or two priorities, how are you thinking through them?

Michelle Chang, CFO, Zoom: Yes. So I would say from a CFO perspective, there’s kind of two top priorities that I’ve said. One is growth rate acceleration. Pretty basic. That’s what I believe our stock trades on.

Second one is to really work on the capital allocation that you said. Now I think about that as both internal capital allocation as well as external, but doubling down on our buyback, getting more refined about questions that we naturally get from investors about what are you doing with all the cash and all of that. So from my management point, those are my two priorities. But I guess maybe I would give this audience three things that we’re focused on from a Zoom perspective of our business priorities, right? So, so many people think about Zoom as a meetings company, right?

But it’s far more than that. It’s a platform. And so are we evolving from being just meetings company to a workplace platform company? Second priority is, are we moving into natural adjacencies of TAM that can help our growth rate? And the third priority is, we really infusing AI across both of those things and beginning now to monetize AI more explicitly.

And so when I came in, it was really over these dialogues with Eric about we really need to get more refined in terms of how we talk about our business priorities to investors, but also to Zoomies as well.

Samad Samana, Analyst, Jefferies: Listen, I tell people this all the time. Zoom is the only application other than Microsoft and FactSet that I use every day. And it knows more about me than anybody else because it hears all my calls. And so to the extent that anything can help me, knows more than Microsoft does about me as well. So it’s just I think there’s obviously a huge opportunity there.

And I think that dovetails well into maybe the company gave some new disclosures recently about other products in the portfolio. Can you walk through maybe some of those other products that are in the platform that maybe get less of a spotlight shined on them because we’re not day to day users of CCaaS or we’re not day to day users of AI Companion.

Michelle Chang, CFO, Zoom: There’s a ton of products that maybe people don’t know about that are sort of what we call our workplace platform. Like and so just to give a nod to that, and then I’ll talk more about your specific question. But, you know, Zoom isn’t just the meetings experience. It’s calendar and chat and collaboration and, email. So many people don’t really internalize that and yet that’s what the Zoom workplace is.

It’s that central place without having to toggle all over the place to get your work done. But the to that third priority that I talked about earlier of going into naturally adjacent TAM, it’s really moving into there’s kind of two that we talk about, so I’ll just keep it as simple as two here. One is customer experience. Really, you think about the customer ethos and the video and voice and the natural things, the system of engagement that knows too much about you, is a natural extension then for us to go into customer experience. And so there we are really seeing a ton of excitement from our customers, really big wins, which we’ve highlighted in the past, but also broad scale demand.

Like if you look at where we’re winning in contact center, almost all of them big name replacements of cloud providers. So we’re excited about what we see there. Almost all of it AI driven, which I think just speaks to the market transformation, but also sort of Zoom’s fresh differentiated position. The second thing that maybe I’d highlight is our employee experience. So think of this as a central place where a C suite can go and have communications out, I can communicate to my team, etcetera.

And so we’re really excited about what we’re seeing there. Ton of demand from customers, in particular, kind of Fortune 100 type customers. And really the thing that maybe I’ve been trying to push a little bit more with investors is both those products are bringing new customers into the Zoom ecosystem. So it’s not just a land and expand upsell, it’s actually bringing new customers into our ecosystem. So something we’re really excited about.

Samad Samana, Analyst, Jefferies: And I think that’s underappreciated just because of how ubiquitous Zoom now is for everybody. So it’s good to hear that. And maybe stepping back, I think you’ve been very consistent since joining about accelerating growth, right? You mentioned it here on Sage. What do you see as maybe the core drivers of growth over the next few years?

You just mentioned new sources of new customer acquisition. Land and expand has obviously been a key part of the strategy. I think investors may want M and A to be included in that at some How are you thinking about those different drivers of growth?

Michelle Chang, CFO, Zoom: Yes. So let me go back to I’m just a simple person, the three business priorities, right? In our core business of kind of phone and meetings workplace platform. We got to be like not the fun stuff, but grinding out churn and all the basics, expanding to new markets, expanding into channel. And we’re really pleased with what we’re seeing there.

And I think a lot of that really speaks to Zoom took a differentiated approach in AI, which was the belief that a certain level of AI value should be democratized for our customers. Customers shouldn’t have to pick and choose. The CIO shouldn’t have to pick and choose who gets the meeting summary and who doesn’t. There’s that. Second thing that I think we’re excited about is sort of moving into the adjacent TAMs.

I feel like I captured those. And then third priority is really around AI, right? And it is AI making sure that that differentiated decision monetizes in some way. But now we’ve introduced a lot of specific products, vertical AI products as well as custom AI companion. Think about it as that next tier level up of business value.

And so we’re introducing a lot of things that now can monetize in AI. And to your question about M and A, I think what we’re trying to do is, okay, the refine for investors what it is that how they can think about M and A for us. So what we’ve said, maybe just to reemphasize here is, it will be in one of those three business priorities. It will be in something that accelerates top line growth. It will be something that’s strategic and differentiated within that and it’ll probably then translate to something in the small to medium size.

Samad Samana, Analyst, Jefferies: Great. Appreciate you clicking on that. So I want to skip ahead to AI actually because you just mentioned it. I think it’s a good transition point. For those that maybe weren’t on the earnings call last week, Eric used an avatar.

It was a very unique experience, the first that I’ve seen on an earnings call. And it I think showed the power of what AI can be for both a user and then the person at the other end experiencing it. And it allowed him to in a different way communicate what he was trying to say and I thought it was very unique. So maybe help us understand just some of the various AI investments in greater detail that the company has made And just like how are you thinking about what the early feedback from customers has been?

Michelle Chang, CFO, Zoom: Yes. Perfect. And maybe just a fun little note because I don’t know that this totally came across in earnings. You can give me a feedback afterwards, but he didn’t speak any of this. Like we said the script, you know, with pictures of him and whatever.

Like, it wasn’t him talking, so it’s it’s interesting. If you think about where you could go with that, you know, you could translate that in many different languages around the world and be able to have a CEO give a speech that goes viral across the world and they never even have to say it. So it’s fun to sort of, I think, have those moments so we can embrace that. In terms of where we’re investing in AI, I think it’s a process. Just kind of go back to those three business priorities.

It’s in our core, right? In our core, even though it’s not, it’s sort of it’s included with all paid SKUs, are we moving customers beyond meeting summaries? I think for so many meeting summaries was just a natural place for Joneye to take root, right? But it has to go far beyond that. And so what we’re really excited about that we announced in the last earnings is not just the MAU, that’s kind of the stat that we give just to show momentum in AI.

And I don’t know that this totally came across in Eric’s words, but we saw a 500% increase sequentially quarter over quarter of customers moving to use it in the side panel. Zoom speak what that means is more depth usage. So customers then now, again, 5% sequential, taking that and saying, I’m going to use the side panel. Think of that as like a chatty bitty type of thing. We call it AI companion for Zoom to prepare for a meeting, to then take the actions from the meeting, to build that, to take independent things, to schedule meetings off of it and you think about what it could all do.

So in terms of where we are focused in terms of our investments, infusing it in the core, infusing it in those two businesses that I talked about in WorkVivo and contact center. Obviously, contact center, you’re far, far further on that journey right now. Most of what’s driving the growth is the AI transformation. But maybe the piece that I might draw on our investments is really making sure that like, God, I can’t tell you how many CFO to CFO dialogues I hear where it’s like Johnny and Susie get two hours back in their day. How on earth are you going to take that to a board?

Right? And so we’re very focused on proving it out in Zoom first, making sure it has business value for our customers and then turning around and really landing that at the pace of the customer.

Samad Samana, Analyst, Jefferies: If I maybe pull on that thread a little bit, I think it’s an opportunity to transform from I think what most people view Zoom as is either a communication or an engagement layer, but really becoming a core part of workflows. And I think that term gets used as often, right? Where if I have the companion add on where I’m embedding workflows like ServiceNow or HubSpot or some of your other key integrations. Are you starting to see that conversation shift when you’re having the CFO to CFO conversation where Zoom is being viewed more as something that’s integral to the workflow beyond how we engage with each other?

Michelle Chang, CFO, Zoom: Yes. And look, we’re at different stages. So I would say for sure in contact center, like people are very excited at the modern approach. They’re very excited. Like the bulk of what is driving our revenue growth in contact center is our AI SKU.

So that I would say is already there. What we just announced in market in Q1 is custom AI companions. So think about it as you bring your own data, you bring your own indexing, you’re automating business workflows. That’s where it gets to the point where you’ve got to have those integrations, right? And so I would say it’s still early days, but customers are excited at I think, the approach that we’ve taken where it’s like if you were somebody that wants to be in the same workplace and that’s how you want to kind of manifest that value, we’ve got that.

And if you also want to just have the deep integrations and serve it over there, like, for example, we do a lot of our AI summaries and pull in our AI value in a Teams interface, which people may not want to. But I think it speaks to this kind of ethos of an open ecosystem that Zoom has always embraced.

Samad Samana, Analyst, Jefferies: And I know you mentioned it’s early just came out in April the custom add on. But how should we think about maybe adoption given that’s one of the few products that you’re actually charging for extra? What are your expectations that you’ve embedded?

Michelle Chang, CFO, Zoom: Yes. So look for us and my mental frame is it actually starts with the stuff that’s included and no additional cost. We got to get that now up that I talked about. We got to get the depth going. Then that provides a very natural first inroad for our Custom AI Companion, which we monetize at $12 per user per month.

And so look, we’re going to think about that as sort of a natural place to start with our pipeline. And I would say two, we’re excited about strategic partnerships. So we announced a go to market partnership with Amazon and their Q product, which we think will be a great synergy between the two companies. So we’ll take both approaches.

Samad Samana, Analyst, Jefferies: Appreciate that. I want to maybe shift gears to a little bit more short term oriented. As I mentioned, you guys did report last week. So I’m sure that’s fresh or recently it’s fresh on it feels like the days or

Michelle Chang, CFO, Zoom: months are mine are very burning my brain.

Samad Samana, Analyst, Jefferies: So if I think about maybe just the recent results, I think the quarter itself was good. And then you guys raised guidance a little bit. Just maybe help us understand what you’re seeing in the current demand environment and how that influenced the revision to guidance as well? Yes. Perfect.

Michelle Chang, CFO, Zoom: So what we said in guidance was that we beat the quarter and when we raised on the full year. But there was some additional color, which I think is sort of where you’re going with your question, where we used the opportunity with investors to talk a little bit more about the balances that we saw in the guide. And so what we said is, previously on the Q1 earnings, we’ve been asked a question about were there any price increases contemplated when we gave our full year guide, which was last quarter. And so look, we haven’t had all the research come in until we use this moment as an opportunity to announce that we’d be doing a price increase on a subset of our customers and online. And so we quantified that for investors at 10,000,000 to 15,000,000 And then we said we were going to take a prudent approach and really offsetting that with the enterprise side of the business.

And so what we talked about on the earnings call on the enterprise side was there were a subset while we saw broad demand and no macro impact on the online, while we saw broad demand and no impact to macro in the bulk of our enterprise customers, there were some larger customers in The United States that I think very naturally had sales elongations. There’s so much uncertainty, the pausing, the wondering where we should go and so more deal scrutiny and sales elongation and that’s what we use at the moment in the guide to kind of offset.

Samad Samana, Analyst, Jefferies: So I want to dig into the price increase. Your online churn has actually come down quite a bit. It’s I think for the first quarter it was at a record low level and now you’re passing a price increase on the online side. Maybe help us think about what gives you confidence with churn sitting where it is that now is a good time to raise price as well and how you think about that the value that gets added for the client on that side as well?

Michelle Chang, CFO, Zoom: Yes. Perfect. So I mean one is we feel good about where we are with churn. While I have this group here, think one of the things that maybe people don’t fully realize is that the online business that we had sort of in the pandemic era is definitely not what we have now. Like great, over 70% of our business on the online side has been with us for more than sixteen months.

Over half, you know, our monthly billing, but 49% annual. So it just speaks to a very different, more stable base. We’ve been working Charm, but actually the price increase, and I I actually love this about Zoom is, you know, I both hated as a CFO and maybe love it on the other side from a customer vantage point that we tend to not wanna pull the price lever for very righteous reasons of our founder is very much about creating customer love and demand and value. But look, as we started to reflect on it and that research came back, we put a ton of value in platform. Now what we see is because you can now get chat and email and collaboration tools and in addition to meetings, there’s so much more value in the platform.

And because we’ve put a base level of democratized AI value in our online skews, that’s adding a ton of value that like, to an SMB, what that can mean is you don’t need a Loom, you don’t need a calendar, you don’t need a Slack, you don’t or maybe they won’t be having Slack, but, you know, you don’t need a note taker. Right? You can get a ton of value in Zoom. And so we announced what I would call sort of a nominal price increase to reflect that. We also wanted to add something just net new, which is we doubled the storage.

Samad Samana, Analyst, Jefferies: For what it’s worth, my associate Billy and I, we did a survey and customers said they’re willing to pay for it. So it’s adding value even and that was before you guys announced the price increase. So I think if the value is there, the price will get paid. And I think that that’s what you’re seeing both in what your price increase is showing and I think what surveys have shown out there as well. I want to maybe switch gears to the enterprise side of the business.

WorkVivo has been particularly successful for the company that’s you guys saw growth accelerate there. Maybe help us think about just the organic execution there versus the Meta partnership and how durable you think that

Michelle Chang, CFO, Zoom: Perfect. So for those that may not be aware, Workview is our employee experience. So think of this as like a central place to go and get information, your company, intranet, communications out, etcetera. And look, part of what is driving the growth that’s sort of behind the question is a lot of the strategic transition of Facebook’s products onto Zoom space.

And so look, that’s driving a lot of growth. What I would remind and what we always talk about is before the sort of transition, which does taper off towards second half, like we have been growing along the lines of this as well. So we feel very good about not just the product, but the value that is in it. So there’s lots of things that we could go to in terms of doing that, but we still really think about this as customer driven business at this point, share moments. In particular hunt very well with large kind of Fortune 1,000 type customers.

And so for us, the stat we always share with investors is our customer growth because for us, that’s what this is about. Maybe the other thing that I would say, so we don’t think about to answer your question directly, the meta will it be a thing? Yes, but we’ve known about it forever. We’re prepared. We are growing things before.

Maybe the other little tidbit that you didn’t ask, but I think is really cool is 90% of the customers in WorkVivo are net new to Zoom. So we’re very pumped about what that allows us then to introduce those customers to Zoom in new ways.

Samad Samana, Analyst, Jefferies: Great. I know we’re running a bit short on time, so I’ll try to Zoom, pun intended, to the last couple of questions. On the contact center side, it’s a space that’s competitive, but you guys have, I’d say, been viewed as a disruptor. You’re growing triple digits is what you announced most recently. What do you think is giving Zoom the right to win in that space?

And how important are the role of partnerships in that?

Michelle Chang, CFO, Zoom: Yes. So what the themes that we see of why we win is a lot the backbone of Zoom, like that omnichannel excellence, it just works, pace of innovation, end user customer obsession and love. We hear from customers all the time that I told you what I wanted and you delivered it before the deal even got done. And you know what I mean? So like that deeply, I think, is contributing to kind of that disruptor.

Second thing that we hear all the time is sort of, I guess, tangential to that, but the AI value in particular across that and just the business value that customers are able to see from deployment of the product. The third thing that I would say we see thematically across deals is this concept that customers don’t want different platforms. I mean, we do it either way. So if there’s customers that don’t, but this better together concept where people want their customer interactions in the contact center to be on a similar plat or on the same platform that then they are internally communicating and collaborating with because it just allows that kind of flow from fixing customer solutions back out to flow even better AI scenario value realization. So I would say those are really the things that we see hunting very well for us.

And I think strategic partnerships will be essential to anyone. But just something that integrations are a big focus for us. But also just broadening out our own platform, a lot of what even within contact center. So a lot of what is driving our revenue today is agent assistant AI. What we’re starting to talk more about in earnings is that 100% virtual assistant, which hasn’t been a big revenue driver, but obviously is where the market is going.

So we’re excited about that as well.

Samad Samana, Analyst, Jefferies: Understood. Just with the last question. I know we touched on capital management briefly earlier, but your recent quarter had a record level of buybacks. And I’m curious how much of that was opportunistic given market conditions versus a signal that maybe the buyback is kind of the focus area in capital management?

Michelle Chang, CFO, Zoom: I think it’s both. Look, I think for perhaps too long, Zoom waited to do something more substantial with those buybacks. One of those was already announced before I came on as CFO. And then as I was talking about the board, you know, very quickly, one of of the first conversations within a week of being there was, hey, do we really want to show investors that we hear their feedback on buyback? And so the doubling down.

Do I think it’s a transformational shift? No, but I think Zoom was arguably a little late to the game. And so I think you’re going to see us and that was why I announced that and then put a time bound on it of when we expect to use it. So within the quarter it was obviously a bit opportunistic, but we still just reiterated the commitment to the 1,200,000,000.0 within the fiscal.

Samad Samana, Analyst, Jefferies: Great. Before I let you go Michelle, have a fun fact for you. So during COVID, one of my colleagues, Jeffries, I believe wrote a book called, instead of Goodnight Moon, was Goodnight Zoom.

Michelle Chang, CFO, Zoom: I have.

Samad Samana, Analyst, Jefferies: So it’s that is how often everybody was using it that an employee in here wrote that book. So

Michelle Chang, CFO, Zoom: Okay. Wait. Where is this person? Or or they’re just at the conference? She

Samad Samana, Analyst, Jefferies: she was back at HQ.

Michelle Chang, CFO, Zoom: I think you told me that in one of our last meetings because I went out and bought the book. It is.

Samad Samana, Analyst, Jefferies: You know, it’s that’s Jeffrey’s love of Zoom, an employee would write a book about it because of how often she was using it.

Michelle Chang, CFO, Zoom: Thank

Samad Samana, Analyst, Jefferies: you for joining We really appreciate it and look forward to talking to you soon.

Michelle Chang, CFO, Zoom: Take your conference. You guys.

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