Zoom Communications, Inc. (ZM) Earnings Call Transcript & Summary

Hello, Zoomtopia. I'm very excited to share with you what AI Companion will be redefining productivity not just for today but for the future.

All right. So tell us a little bit more about the technology, which is powering at all.

Absolutely. There are really 3 key things I want to highlight. That will set us apart from everyone else. First, our federated AI stack. We are combining the best of the best models out there from Anthrobic, open AI, matter. We also bring web search capability through our partnership of perplexity. By combining all of those models together, we are also developing our proprietary small language model. Combined with all those amazing AI models, we are able to offer unmatched performance and efficiency. Number two, we are having AI first user experience. We are optimizing both screen-based graphical user interface as you are familiar and conversational user interface as defined by ChatGPT. The information will flow between those 2 to adapt to your needs to be truly AI first not bolted along. And the third, we have truly system of action. This means we will anticipate your needs, learn from your pattern and take action as needed. AI Companion will help to track your action item for the whole life cycle of your projects. This is a step above what we are now for the productivity suite as defined by the previous generation. Those are the 3 key things set us absolutely apart on anyone else.

That is so cool. So we keep hearing so much about AI agents. What can our customers expect from Zoom on that?

So Zoom AI Companion 2.0 is already a super agent. We will adapt this for your own needs, get good memory and attract the life cycle productivity needs for you. The act item, the task you need to pay attention to, would be harvested, curated and updated for the life cycle of the project. This is going to be unmatched productivity for all of us.

Just to clarify, so you are saying instead of having multiple individual agents assigned to chat channels or documents, AI Companion will be your single unified personal assistant?

Yes. AI Companion will orchestrate all the potential agents out there from both first party and the third party to orchestrate this on your behalf to help you redefine productivity. Thank you.

Thank you, XD. All right. We hear a lot of love for Zoom AI Companion, but you have also been asking us for more because the way your employees work and the way your company works is unique, and you have asked how AI Companion can evolve to address this. Well, you have come to the right place. I am beyond excited to announce that you will now have the ability to make AI Companion your own with a new custom AI Companion add-on for Zoom Workplace license. Super exciting. Let us dig into its capabilities. By giving AI Companion access to your data sources and favorite apps, you can expand its ability to do more in ways that align with exactly how you work. It is more customized to your needs. And it can manage actions across your applications if you wanted to, like XD said. For example, here is an internal collaboration example. Let's imagine you are in IT and you need to give the marketing team access to new software. First, AI Companion pulls a list of employees from Workday Connector, then it asks ServiceNow's AI agent Now Assist to attach it to the request. Now Assist performs the task and confirms this step is done. Next, AI Companion submits a Jira ticket to provision the software to the team. AI Companion in action across the apps that you use. Now check out the stellar group of companies that will have connectors for custom AI Companion add-on. Together, we are enabling you to work exactly how you want to work. That has always been a core value for us. That's why we have always been an open platform with more than 2,700 apps and integrations in the Zoom app marketplace, killer APIs and SDKs, the possibilities are truly endless. So what powers all that goodness, another new Rockstar Zoom AI Studio. This will help you customize your experience. With Zoom AI Studio, you will be able to find tune AI Companion with your company vocabulary, add knowledge bases like employee handbook, HR policies and whatever else you need easy access to. Plus you can build new skills like a highly customized meeting summary template that makes your summaries even more actionable and effective. The custom AI Companion add-on will also provide more personalized experiences. So you can grow your skills and scale your efforts. With the personal coach capabilities, each user can benchmark themselves and set their own custom goals to help them grow and improve. You can also personalize your video clips to look and sound like you and AI Companion will do the rest. Just enter your script and it will generate the video for you. You can even have it translate your message into different languages. It is amazing to see that. Now it's easy to get your message out fast and share it widely. This feature has many built-in safeguards to help prevent misuse for deepfakes, advanced authentication methods, watermarking technology and strict usage policies are all used to protect the integrity of Avatar generated content. Custom AI Companion add-on will be available for purchase in the first half of 2025. I can't wait to hear about all the ways you'll tailor AI Companion to amplify and accelerate the great work that you do and to help your employees work happy. Over the last year, AI Companion has really changed the way we work at Zoom as it has for many of you. I'm excited to welcome the CIO of Zscaler, Praniti Lakhwara, to share how their team has been using AI Companion. Come on up Praniti. Thank you so much for being here with us today. Tell us how are you using AI Companion at Zscaler?

Smita, thank you for having me today. Listen, like all companies at Zscaler, we've been thinking very intentionally about how we can leverage AI to make Zscaler more competitive, more agile. And like all CIOs, I have to think about how to use the plethora of tools that are out there securely without any data leakage and with data privacy at the forefront. My task, as you can imagine, is amplified as a CIO of a cybersecurity company. Zscaler's business is helping thousands of companies, securely use Gen AI. So you can imagine how seriously we take this. So after a robust process, due diligence security process, governance process, we turned on AI Companion in April 2024, all of the features.

Wow. And how do you decide which employees get access to Zoom AI Companion?

We talk about Zero Trust. One of the principles of Zero Trust is segmentation. That is our colleagues have access to the right tools, the right resources without giving broad access to everyone. But in Zoom's case, as one of our largest productivity platforms, we didn't have to segment. We have enabled it for all of our users. We do.

We love our customers. And what has the response been?

Oh, gosh, it's been great. I'm a firm believer that productivity tools. They need to be adopted organically. We need to foster a pull versus a push approach from IT. And this means that employees are naturally going to gravitate towards these tools because they make their work lives easier, right? Since we've turned on Zoom AI Companion, we've seen just that, a very healthy natural adoption where the tool has quickly become an integral part of our daily workflows. The intuitive design, it's enabled employees to really embrace AI Companion without a lot of training from IT. And as you know, consumers these days, they expect this ease of use in tools. And enterprises like us, we've got to deliver consumer-grade experiences. Our task is made easier because Zoom does this extraordinarily well.

Thank you. And Zoomies really appreciate that, I'm sure they were hard at it. And where are you seeing share with the audience the greatest impact for your business?

I've been talking a lot to my team about digital employee experience. it's more critical than ever, especially in high scale organization like ours. We often discuss employing experience and culture in terms of these big picture goals. Yet the reality is that these concepts are built from everyday moments, routine meetings, casual conversations, one-on-ones and unfortunately, every day friction and making things easier for our teams every day using AI companion, it contributes to raising this bar on experience. One area that I will be very specific on has been particularly evident raising the bar is among our sales and customer success teams. They have been eager adopters leveraging Zoom AI to streamline client interactions, taking notes to prep for meetings. And AI Companion really enables that extra level of support. It allows them to focus their time on building resolute relationships versus doing these administrative tasks. Another area that I'm going to talk about, which I think is common for all of us. especially beneficial for geo dispersed teams. We can now have team members quickly catch up on what happened, no matter where they are, no matter what time zone they're in, crisp meeting summaries for the wins. And this dual impact, Smita, on both productivity and work life balance, it really contributes to individual satisfaction of our employees and to the overall success of our business.

Thank you so much. Thank you so much, Praniti. It's great to -- I'm sure the audience love hearing from you. Thank you so much. Pleasure to have you. Next, please welcome Cynthia, who's going to share everything you need to know about the new innovations across Zoom workplace. Come on up, Cynthia.

AI Companion is coming to Zoom Phone as well. You can ask a question and get summaries just like you would on a Zoom meeting. And if you don't need to have a meeting, but do need to provide a quick update, AI Companion will be within Zoom Clips. So you can choose from one of our prepopulated avatars and start generating video clips right from the script in seconds. No more need to get camera ready and no more time wasted perfecting and recording. Let me show you a demo. Meet Craig. Craig is on a tight deadline to create a global strategy and rollout plan for an upcoming product launch. Leadership wants to review it tomorrow. He's feeling short on time and overwhelmed, but he knows he has AI Companion by his side. Here's how it's helping him as he works towards the looming deadline. There are a lot of stakeholders working on the product launch. Craig asked AI Companion to schedule a meeting for him with everyone in the project chat channel. AI Companion queues up the meeting invite and even suggests an agenda to make sure the meeting is as productive as possible. Craig shares a meeting invite into the chat channel and he's ready to go. Now it's time for the meeting. Craig's goal is to make sure the team is ready for the executive review. As his teammates join, Craig uses AI Companion to conveniently open up the agenda to kick off the meeting. The team gets deep into discussion on regional competitors for the launch. Craig asks AI Companion to summarize the feedback from the team. He then asks AI Companion to get more specific and clarify what regions the team was referring to. AI Companion reminds Craig that the team is focused on Europe and South America. The accuracy amazes Craig. AI Companion is actually acting like a fourth person in the meeting, picking up on the context of the conversation, too. Next, Craig asks AI Companion to create a Zoom Doc that they can use for the global rollout. AI Companion uses the information from his global strategy presentation and the conversation they've had so far to create the Zoom Doc for him. Craig shares the doc into the meeting, but this isn't a regular screen share. Everyone on the meeting can collaborate live together. With the agenda topics addressed, it's time to wrap up and get next steps. AI Companion does this for Craig as well. It creates a set of next steps from the meeting and helps insert them into the Zoom Doc to help manage the project. The team agrees and they end the meeting. After the meeting, the global rollout plan is shared in team chat. The team starts providing feedback, and Craig wants to make sure all that feedback gets captured in the Zoom Doc. In the past, it would take a lot of time for him to assist through all the e-mails and chats. Well, not anymore. AI Companion can do that for him. Craig opens a Zoom Doc and asks AI Companion to update the doc based on the feedback in this chat channel and an e-mail. AI Companion synthesizes all that information and incorporates the feedback into the doc. One of the tasks is to create a clip to make sure the marketing team is aligned to the global strategy plan. Craig clicks on the task and is taken to Zoom Clips to create the update. Well, Craig is in a hurry and doesn't have time to perfect the recording. So he uses Clips Avatar to help. AI Companion creates a recommended script and Craig selects an avatar from the list to generate the clip. He checks the clip for accuracy and shares it with the marketing team. Just like that, Craig has completed this task. The task is marked as completed in the Zoom Doc and in Zoom Tasks. AI Companion has surfaced a couple of additional action items on Craig's task list. One of the tasks is to call his boss and update him before the executive review tomorrow. Craig calls him on Zoom Phone to get ready for the review. AI Companion is right there with Craig on Zoom Phone too. He can ask questions and get real-time summaries just like you saw earlier on the meeting. His boss loves the plan. Awesome. Now they're ready for the leadership review. Getting various teams aligned to meet the deadline can be hard, especially when you have limited time. With an AI-first approach, Craig was able to get ready for the big leadership review tomorrow with AI Companion there every step of the way. This is the power of AI. It truly can help you fly through your day and get more done. Now even though Zoom transformed virtual connections, sometimes things happen in person. Well, the good news is we're expanding AI Companion to support in-person collaboration. Soon, you'll be able to use AI Companion for in-person meetings, just like you do for Zoom Meetings to take notes, create summaries and identify action items. On your phone, just click on in-person meeting and AI Companion goes to work, so you can focus on the conversation. And for those who go into the office, we are expanding AI Companion capabilities to workspace reservation. It helps make sure your commute is really worthwhile by automatically recommending which days to go in based on when your teammates will be there. WorkVivo, the employee experience platform is also part of Zoom Workplace. When it comes to company culture, employees across the world and businesses of all sizes love WorkVivo. It serves as the digital heart of a company, helping increase employee engagement, remove barriers internal communication and create a sense of belonging. It's so impactful that companies, including Amazon, Virgin, ExxonMobil and Dollar General, all use it to elevate employee engagement. And AI Companion is coming to Workvivo, it'll help you create employee-related content faster and smarter. We're also introducing employee insights. Workvivo's new solution with AI to help you improve employee engagement and performance. Let's take a look. [Presentation]

Zoom Workplace is fast becoming a force to be reckoned with, helping businesses across the world accomplish more and experience what it means to work happy. Now please welcome Michelle. She's going to dive into Zoom AI solutions for customer experience.

Thank you, Cynthia. Okay. Here's the deal. More often than not, customer experiences are frustrating. You've been there, so have I. It sucks. But the harsh reality is customers are breaking up with brands after just 1 or 2 bad experiences. It is more important than ever to improve how you support them. And it's not just customers, agents need support, too. That's where Zoom Contact Center cuts in. It has AI built in, not bolted on like some other technologies, giving your customers more visibility across their customer journeys so they can create seamless experiences. It's rapidly improving the way agents work, collaborate and connect. One of our happy customers, Vensure Employer Solutions, use Zoom to transform employee and customer experiences. By connecting the back office with the contact center, they were able to reduce handling times and increase their first call resolution. It's a great example of the power of Zoom Contact Center and the direct relationship between employee happiness and exceptional customer experiences. But Vensure isn't alone. Over 1,300 brands from around the world trust us with their most precious asset, their customers. The AI within Zoom customer experience predicts, automates and most importantly, makes customer engagements more natural. Nothing is more frustrating than being stuck in a robotic self-service loop with no way to reach a human agent. Zoom Virtual Agent solves for this by providing personalized and engaging chat conversations that make your customers feel heard, and it's intelligent enough to identify when to escalate to a human agent, so customers can say, goodbye to those robotic loops. And today, I am super excited to announce new enhancements to Zoom Virtual Agent. It can take several problems and solve them within a single engagement without getting confused or dropping the ball. It uses natural language processing in ways that feel natural to your customer, like they're talking with your best agent. And later this year, we'll be previewing our virtual agent for voice. So what you get in chat today, you'll get for phone calls. This means whatever type of support your customers choose, they'll get consistent high levels of self-service. Now when it comes to your agents, it's critical to treat them like a valued employee because they are the face of your brand and your relationships with your customers are in their hands. But they're overwhelmed with call queues, struggling between toggling with many systems, trying to find information. They're spending too much time on administrative work required after a call. They need help, and it's no wonder turnover is so high for agents. It's important that they feel empowered, supported and connected to the entire organization, and this is how Zoom Contact Center is able to help. AI Companion for Contact Center helps reduce time spent on administrative tasks. It summarizes calls, generates follow-up tasks and analyzes customer sentiment, saving agents valuable time, plus it's included with every contact center license. AI Expert Assist provides even more help throughout engagements. It surfaces customer information from CRMs and suggests what next steps should happen right from the agent desktop. And to help them further, today, we're announcing even more capabilities for AI Expert Assist. Our agent guides provide simple scenario-based scripts to support agents every step of the way. And now our new dynamic agent guides take that even further. It analyzes the conversation in real time and identifies which of those steps it can skip. This saves both agents and customers from having to repeat things unnecessarily. Suggested Answer uses AI to understand conversation context and provides the agent a suggested scripted response so they can keep the conversation moving without any interruption or delay. And of course, we support supervisors, too. Up until now, Supervisor Assist enabled real-time call monitoring and live sentiment analysis. Now we're giving them supervisor flagging, which notifies them immediately when a customer engagement needs their attention. That means they can focus on other tasks, knowing they won't miss a single urgent intervention. These new features deliver instant insights and on-the-spot support that translates into happier agents and customers. Now I'd like to welcome Robin to the stage and see how it all comes together.

All right. Let's check back in with Craig from our first demo. His favorite baseball team just made it to the playoffs. He already has tickets for him and his wife. But here's the kicker. His in-laws just decided to join them unexpectedly. Now Craig needs 2 more seats near theirs. And Craig forgot to complete his season ticket renewal at his new address. He needs to get this fixed quickly. He hops on the Osmo website and starts chatting with their bot. He types in the 3 things he needs to do, grab 2 more tickets, update his address and renew his season tickets. Well, luckily for Craig, Osmo uses Zoom Virtual Agent, which is tailor-made for handling these types of requests. Craig didn't mention the exact date of the game or where he wanted to sit, but the virtual agent is already on it. It's digging up that info behind the scenes. And what's cool is Craig can see the seat options for his in-laws right there in the chat window. This helps them visualize how close they will be. He reviews them, then makes his choice. Craig is impressed by how smoothly this interaction is going, and the virtual agent is just getting started. Craig has 2 more items on his to-do list, and the virtual agent is not going to leave him hanging. In a friendly tone, it asked Craig to clarify his address change. It's connected to Osmo CRM and will be making the update in real time. Next, the virtual agent moves on to the last request, renewing his season tickets. Osmo has some stringent rules and decides to bring in a human agent to help. It quickly identifies an available renewal specialist and brings her into the conversation. Now let's continue from the point of view of our agent, Vivian. Before jumping in, she takes a quick peek at Craig's chat history. Empowered with the context, she feels ready to help. Vivian picks up right where the virtual agent left off, so Craig doesn't have to repeat a thing. He confirms his seat choice and then asks Vivian if he qualifies for any special fan experience. With one single click, AI Expert Assist researches Osmo's knowledge base and creates a response for Vivian that she can copy and paste right into the conversation. And this saves her valuable time and ensures Craig isn't left waiting for a response. She tells Craig, he is eligible for some special perks, and AI Expert Assist jumps back in to give her hand on booking it. She's guided step by step through a list of questions that will help personalize the experience for Craig. He answers all the questions, and that's it. Craig is booked for the season and is all set for a special meet and greet experience. Vivian feels proud that she's delighted another customer. She ends the chat, and AI Expert Assist has one more trick up its sleeve to help. It auto generates her post-call notes, a task she hates to do. Feeling empowered and encouraged, Vivian is ready to take on her next customer. With Zoom Contact Center, providing exceptional customer experience is just that simple. Now I'd like to welcome Randy to share what's new for our industry solutions.

Thanks, Robin. So Eric mentioned that we launched 3,000 features this past year, and several of these were actually based on industry-specific requirements that you asked us to build. From government, health care and education to retail, financial services, manufacturing and beyond, we've got you covered. For example, in the U.S., we just recently added AI Companion to our FedRAMP authorized Zoom for Government product portfolio. Now when it comes to education, the way people learn has changed, and Zoom has been at the forefront of supporting that evolution. In fact, today, nearly 90,000 schools, universities and educational institutions globally are using Zoom to enhance learning outcomes. And many of them are already benefiting from AI Companion, including the University of Rhode Island. Well, we've got a lot more up our sleeves to support the education industry. And I'm pleased to share that now we're expanding AI Companion with education-specific enhancements to empower educators and to keep students engaged in both remote and an in-person learning. So teachers and professors, they actually spend around 10 hours a week creating lesson plans before each class or lecture. And this translates into hundreds of hours to develop a year's worth of material. Teachers, we got you. With Zoom Docs and the power of AI Companion, you can now create your lesson plan in much less time. AI Companion will use your past class summaries, lecture content and other resources, including information from the web to help you quickly build lesson plans. In class, AI Companion can also help you strengthen student engagement by monitoring and summarizing in-class chats and then answering student questions all in real time. And after class, AI Companion can enable continuous learning by automatically generating rich interactive lecture summaries as well as class materials like flash cards, quizzes and assignments. It's pretty cool. So up until recently, and I think all of us know about this when we were in school, taking notes -- correction, taking good notes in class was actually a chore. Well, that's why we are very excited to announce a new Live Notes feature for education. Live Notes in AI Companion takes notes whether students attend class remotely or in person. So it frees them up to focus on what's happening in class. It also allows them to personalize their notes with highlights and comments for much easier review after class. But Live Notes also helps educators. It allows them to see a real-time transcript, highlighting announcements and actually seeing reactions from students. This helps them focus on their delivery while at the same time addressing questions and knowledge gaps. Best of all, these AI Companion capabilities for educators and students will be included at no additional cost in Zoom Workplace for education plans starting in Q1. And we will also be introducing a new custom AI Companion for education add-on. And this will let you include additional data sources like student information systems, learning management systems or other institutional content like handbooks, approved courses or other policies. Zoom is empowering educators and engaging students in ways that make a really big difference in experiences and learning outcomes. Now health care is another industry on which we're deeply focused. Our 36% market-leading share of the telemedicine industry is a testament to that. And with over 140,000 health care institutions globally using Zoom, we feel a great responsibility to make sure they have exactly what they need to care for their patients. So today, I'm pleased to announce several AI-based enhancements to Zoom Workplace for health care to help employees work more efficiently in hospitals, clinics and other health care institutions. Of course, AI Companion 2.0 will be included as part of Zoom Workplace for health care offerings. And with the new AI Companion for healthcare add-on, we'll provide customization and personalization capabilities like bringing in medical dictionaries, which many of you have asked for. It will also allow integration with EHR systems and access to proprietary health care data or apps. This dramatically increases AI Companion's value and relevance to the health care industry. We're also extremely happy to announce another new health care offering, Zoom Workplace for Clinicians. This will help streamline doctor and practitioner tasks so that they can spend more time engaged with their patients. And a key part of this solution is our new Clinical Notes feature. It will support both virtual as well as in-person visits. So all of this translates into deeper connection with and better care for patients. It also means that clinicians can focus on more important tasks. This is what we call a win-win for health care. Now in many industries, there are critical employees that are helping companies to deliver their services to their customers. These can be nurses, retail workers, maybe factory employees, for example. Well, it turns out that 80% of employees are frontline workers. They're not knowledge workers. That's billions of employees, and they need specialized tools that help them with 3 important needs: one, a connected company culture; two, on-shift communications; and three, work management. Now when it comes to company culture, Workvivo is already helping to create a sense of belonging and support for frontline workers across many industries. And to meet their on-shift and work management needs, we are announcing Zoom Workplace for Frontline. This will be a purpose-built mobile solution with AI Companion woven throughout. So let's see it in action, Robin.

All right. Let's jump back into our story because Craig is headed to the game, but the Osmo sluggers have a lot of work to do before opening up the gates, including getting all of the merchandise ready for fans like Craig to buy. One of their frontline workers in the slugger shop is Clara, and she's getting ready to start her shift before the big game. When she logs into her work device, she opens the frontline worker app and starts on the today page. Everything is automatically set up for her. She can see her most important [ contacts ] pinned right at the top, including her manager on duty and a group of everyone in the same shift as her. She can directly punch into the timekeeping software right from the main page. As she begins her shift, she sees there are remaining tasks from the prior shift to be completed. She clicks on the refresh featured merchandise task and gets to work unpacking the latest graphic T-shirts and putting them on the store shelves. Once she completes the task, it prompts her to take a photo of the rack. She then submits the task and marks it as complete. Now Clara and the Wednesday Shift team are ready for the game, too. In the middle of the game, Craig walks into the store. He asks Clara about the return policy on out-of-season merchandise. Clara knows the standard return policy, but this is a special case. So she asks AI Companion to find the details. She clicks on the AI Companion icon in the top right. Then she types in her question to find out -- find the out-of-season merchandise return policy. That's exactly what we needed. AI Companion quickly pulled the company policy from our database and populated the info right into the app for Clara. Then she shares it with Craig while he continues to shop, but Clara has another task waiting for her. Merchandise is selling fast, and she wants to check and see if there are enough T-shirts in the storage room to make it through the game. Clara uses push-to-talk within the app to do it. She clicks on the Wednesday Shift Group and is immediately connected to her shift team. She asked a question and her teammate, John, responds, giving Clara a status update on the inventory. The Osmo sluggers pulled off a big rally and won the game. That means it's time to close up the store and head home for the night. Clara punches out from her shift. Then she asked AI Companion to create a shift summary for her. Within seconds, she has the summary posted right in the app for her and her manager to see. And it's all right from the mobile app. Now that's the power of Zoom Workplace for Frontline. Smita, back to you.

Thank you, Robin. I hope you all enjoyed the keynote. We covered a lot today. As all of us are starting to understand AI, we know when done right, it is a huge catalyst for transformation. At Zoom, we have woven AI into the very heart of a platform to help you do better in your own work, work with your customers and your colleagues, with Zoom AI Companion at the core of this. Thank you for being here, for being part of our journey. Together, we are shaping the future. Here is to your continued success. Enjoy the rest of Zoomtopia. Thank you.