Zoom Video Communications, Inc. Class A ((ZM)) has held its Q4 earnings call. Read on for the main highlights of the call.
Zoom Video Communications, Inc. recently held its earnings call, revealing a cautiously optimistic sentiment. The company showcased strong growth in AI adoption and enterprise segments, significant partnerships, and financial outperformance. However, concerns were raised about slower revenue growth and challenges in the Online business segment.
Strong AI Adoption and Innovation
Zoom’s commitment to AI innovation is evident with the 68% quarter-over-quarter growth in AI Companion monthly active users. The launch of AI Companion 2.0, featuring advanced capabilities, underscores Zoom’s focus on building agentic AI to boost productivity and customer engagement.
Growth in Enterprise and Contact Center
Enterprise revenue saw a 6% year-over-year increase, now comprising 60% of total revenue. The Contact Center segment also thrived, with customers generating over $100,000 in ARR growing by more than 100% year-over-year, highlighting strong adoption of higher-tier packages.
Financial Outperformance
Zoom exceeded its top-line and profitability guidance, with Q4 revenue rising by 3% year-over-year to $1.184 billion. Non-GAAP income from operations grew by 5% year-over-year to $468 million, demonstrating robust financial performance.
Significant Wins and Partnerships
Zoom secured major deals with Amazon and Delta Airlines, reinforcing its strategic partnerships. The collaboration with Mitel opens access to 70 million global end users, further expanding Zoom’s reach.
Slower Revenue Growth Outlook
Zoom’s guidance for FY26 projects a revenue growth of approximately 2.7% year-over-year, indicating a slowdown compared to previous years. This cautious outlook reflects the challenges in maintaining high growth rates.
Challenges in Online Business
Despite growth in Enterprise revenue, Zoom’s Online business segment faces challenges, with expectations remaining flat to slightly down. Stabilization efforts are underway, but hurdles persist.
Forward-Looking Guidance
For FY26, Zoom anticipates total revenue between $4.785 billion and $4.795 billion, representing a 2.7% year-over-year growth. The company forecasts non-GAAP operating income to range from $1.85 billion to $1.86 billion, with a 39% operating margin. Zoom plans to expand AI capabilities and enhance product offerings, aiming to drive growth through its enterprise segment.
In summary, Zoom’s earnings call reflected a cautiously optimistic outlook, with strong AI and enterprise growth countered by concerns over slower revenue growth and challenges in the Online business. The company’s strategic partnerships and financial outperformance provide a solid foundation for future endeavors.