ZM - NASDAQ

Hello, everyone, and welcome to

Thank you, Catherine. Hello, everyone, and welcome to

Thank you, Charles. FY '26 was a pivotal year for

Thank you, Eric, and hello, everyone. I'm excited to be with you today to share

[Operator Instructions] Our first question will come from Arjun Bhatia with William Blair.

Eric, maybe one for you, we'll start. I'm just curious how you think about AI monetization progress in fiscal 2027? You called out a couple of examples of customers adopting Custom AI Companion and going wall-to-wall. How do you think that and your broader portfolio of sort of AI products evolves in terms of adoption and contribution to revenue next year?

Yes, it's a great question. So we're very optimistic about our AI technology monetization in FY '27, driven by, first of all, and customized AI companion (sic) [ Custom AI Companion ] more and more the customers, they see the value and if we like and of course AI companion are built for free, but Custom AI Companion is different, we can monetize. That's one. And I expect, right, to drive the AI monetization. At the same time, we have very solid AI Companion 3.0 foundation and the team working so hard to innovate. We leverage that technology to empower other use cases like

Our next question comes from Allan Verkhovski from BTIG.

Can you hear me?

Yes.

Awesome. Congrats on the strong quarter here. Great to see the acceleration and

Sure. No problem. Let me touch on the deferred revenue one, because I think this is one that's really important for investors to understand and maybe not read into it as you traditionally might. First of all, it's important to note this is a billing dynamic and not sort of a rev rec thing. What we saw was a recent trend that's actually great for

Awesome. Congrats on the strong quarter, guys.

Our next question will come from Peter Levine from Evercore.

Eric, one for you. I think in a world where AI models or provider -- AI model providers are essentially they're controlling the intelligence layer and theoretically could build AI-native collaboration suites on top of their capabilities. So I guess, question like what's -- like in terms of technology or what structural barriers, I think, prevent them from disintermediating

Wonderful question. I think -- if you think about the mission-critical communication like

Michelle, a follow-up on net retention, 98%. Can you maybe just help us bridge the gap, all the new products that you're having. You're seeing upsell Contact Center, Voice. When does that reflection -- when can we see that in the model?

Yes. So great question on NDE. Look, we've said that it will rebound in the long term, we've not put guidance. And when it rebounds, it's going to be off of so many of the drivers that we're talking about here, progress in churn, phone in mid-teens, contact center in high double digits and obviously, the onset of AI monetization. Look, we're going to run the business sort of to revenue growth and you have our '27 guidance there. But a couple of notes maybe for investors about headwinds relative to NDE. First of all, I just want to go back to that white label churn that we talked about of competitive white label churn that will obviously put some pressure. And then the other thing that I'd call out for investors is actually good pressure, which is with Workvivo and Contact Center, we're seeing them bring in new customers to

Our next question comes from Siti Panigrahi from Mizuho..

Chad on here for Siti. I think the Americas revenue growth trend has been pretty clear and quite strong throughout this fiscal year. I was wondering if you could dive a little bit into the trends you're seeing internationally and sort of any key initiatives there for the up -- the current year to reaccelerate growth there?

Eric, do you want to take that one? Or do you want me to?

Yes, go ahead please.

Yes. I mean, look, I would point to -- we're pleased. I think we give the constant currency growth rates, but they're up and growing across our international business. Maybe the thing that I would call out is, I think as we move into areas like Contact Center, and Phone as well as Workvivo, that's giving us, together with investments in channel, an opportunity really to break into international markets. So it is something that we're investing in. We've also done maybe more local investments like U.K. data center. But it's something that we're focused on and with our broader product expansion, AI monetization, as well as channel investments is something we think will grow in the future.

Next up, we have a question from Alex

I'll maybe make mine pretty quick. There's been a lot of questions around, I think, just your ownership structure of some of the larger foundation model companies. I know we haven't talked about it or asked about it, but given it's such a wide-ranging topic, maybe I'll let you address it to the extent that you want to specifically maybe on the Anthropic stake. And then Michelle, for you just any comments about how clearly the growth on Phone, Contact Center was really, really strong this year. As you look at the guide implicit, I know you don't give product level guidance, but as we think about the sustainability of mid-teens growth in Phone, the sustainability of whatever very high rates of growth are in

Perfect. So let me hit Anthropic first and then we will round Alex, with the product question. Look, in our results, you will see a total strategic investment.

So just quickly, Alex, it's such a great question to add on to what Michelle said. We talk about the top 10

And especially true, just to mark Eric's comment because it's such a good one that is especially true in

Up next, we have a question from Josh Baer with Morgan Stanley.

And congrats on a strong quarter. You obviously have the horizontal tools that every single knowledge worker in the world can use, but you're also building this portfolio of very departmental solutions, marketing, sales, HR, contact center. So a strategy question for you, Eric. How do you balance addressing additional departments and roles with new products versus going deep into these areas, rolling out more solutions in these departments that you're already in and balancing all of that with the horizontal play?

Josh, wonderful questions. Speaking of vertical solution, a lot of my AI avatar, right? I use that for 3 quarters already. As you can see, the quality is getting better and better, right? This is kind of one of the vertical use case for marketing team. Having said that, I think given the AI evolution, AI coding tools, I think we have a foundational technology. Now we can do both. On horizontal front, right, we keep innovating and more features and services, right, and delivery happiness to our customers. You see the AI Companion 3.0 announced in the last December. And also in terms of innovation, a lot of things we're going to announce -- new innovations announced at Enterprise Connect, that's on the horizontal front. Look at each vertical use case, either departmental use case or vertical market use cases, I think because of AI, I think we can monetize. That's why we also want to double down on those use cases. Customer support, my example,

We have a question from Tyler Radke with Citi.

I wanted to ask you about the custom AI Companion. You noted some good wins, I think, in higher education and some other verticals in the quarter. But how are you thinking about that in terms of a driver for FY '27. And is this something where you're seeing list price sort of be realized in the field? Or is there still sort of heavy discounting? Just give us an understanding of sort of how that rolls out from a go-to-market perspective.

Yes. So you look at customer AI Companion. Again, AI Companion is part of our offering. It's for free, it's become more and more powerful. But the way for us to monetize AI Companion is to go through the customer AI Companion, in particular for medium and large enterprise customers because with the third-party applications, connectors and also we build in a workflow and no-code workflow to build agent. And that's kind of our vision, right from a composition to completion. If you do not have a very flexible workflow builder, so how do you build an agent, how can you complete a task, right? So because it used to be zoom, just the collaboration. Now with the

Can you hear me?

Yes, yes.

Sorry, just any way to -- is that going to be a contributor to FY '27? Or is it still kind of early days in terms of that monetization of the premium AI Custom Companion?

It already contributed, right, to our growth. So I've already closed the big customer AI Companion deals in the quarter in Q3 and Q4 with more innovation, for sure, it's going to help us more in FY '27.

Up next, we have a question from Seth Gilbert with UBS.

Maybe just one, if I hold the online growth, online year-over-year growth at about 1.2% for fiscal '27 that would imply that the enterprise decelerates by about 1 point from the 4Q exit rate of 7%. So maybe a question for you, Michelle. Can you talk about some of the puts and takes here that could cause enterprise to outperform?

Yes. Is your question on Q4? Or is it more on guidance going forward?

It's more on guiding going forward. So yes, sorry.

Yes. Look, let me talk about online, and then I'll finish with enterprise. I think online, so pleased to see it return to growth. It was the first time we've had growth since fiscal '22. And look, that growth comes off of adding value in our portfolio of -- in a workplace portfolio as well as AI. And that's why we're able to realize on a price increase as well as keep record low churn. Our guide assumes an additional price increase on the annual SKU. So in line with monthly, it's really just intended to do the same thing as the prior but bring them into value. But look, Seth, to your more Meta question, Enterprise is going to be the durable driver for growth going forward. And I'll just continue to hit home the components. It's making progress, meeting churn. It's keeping Phone in that sort of mid-teens growth range. It's continuing with that better together story to pull along Contact Center and realize the AI value. That is by far where we are seeing the most immediate pulls of the incremental AI monetization in both agent-assisted AI as well as the

Up next, we have a question from Tom Blakey with Cantor Fitzgerald.

Eric, or Michelle, I'd like to hear about maybe some quantifying of these credits that you called out, that was interesting. And even if it's -- you can't call it out numerically, just how they're trending. I think the numerical help would kind of understand, help us as a group understand what kind of headwinds we're talking about that as I know, Eric, you're managing this business for a multiyear basis here as they come -- you guys are innovating and taking share when they come off, like what that would look like? And I have a follow-up, if I may.

Yes, I can take that. So look, it's in line with what I said earlier, which is -- again, I just want to continue to emphasize investors, don't read into this as normal. These are great competitive wins where we're providing a grace period, so that in exchange for a larger and longer-term competitive platform win. Think of this as helpful in sizing, Tom, is really the primary driver between the decel in Q4 relative to the guide in Q1. And if helpful on the other side, maybe what I'd point to is connecting you to that uptick in long-term RPO as [indiscernible] sizing.

Yes, that would be helpful. And then, Eric, just combining you and Michelle's comments here, Michelle is guiding us to grow online kind of relatively flat, but you seem awfully excited about the SMB's opportunity to maybe equally do as well. I know it's early days in terms of maybe tackling the successes that you've had on the enterprise side with CX and Phone, but is it safe to assume that, that's maybe not implied or imputed in that one kind of 1% guide for fiscal '27 online?

Yes. So when I mentioned SMB customer is more like a high end.

Higher end?

Yes. For the online buyers like SMB customers, right? It used to be -- let's say, they look at multiple solution now because of power for AI. And also, I think we have a huge opportunity to serve those SMB customers because we have a very rich product portfolio, great AI capabilities, yes. It's not about individual online buyers, yes.

Michelle, could you comment on BrightHire, anything on the top or bottom line impact into fiscal '27? And that's it for me.

Yes. So it closed mid-Q4. So I think of the impact to Q4 is sort of de minimis. The guide reflects obviously BrightHire. And I would just say that it's a perfect example, I think, of what Eric laid out in the earlier question with regards to vertical and horizontal value. So this is a business where we share common customers, so there's sort of mutual benefits. And this is a product where we have similarities with really taking AI value to rethink the hiring kind of approach, more insights, efficiencies as well as then you have Workvivo on the other side of sort of thinking about the life cycle of kind of human talent. So it's something that they use

Our next question comes from Samad Samana with Jefferies.

So I wanted to ask about pricing. You guys have continued to create a lot of value. You've obviously -- part of it is to drive better retention, which we've seen over the years. Some of it is to be expressed in kind of monetary terms. How are you thinking about that balance for fiscal '27, Michelle? And what are you assuming in the guidance, if anything, from a price increase perspective? And to the extent -- I'm sorry for the 11-part question. I'm learning from some of my peers. But if you have, can you give us a sense of like timing around that assumption as well?

All right. Let me hit explicitly the online, and then I'll move and talk about our enterprise because I think the dynamics look a little bit different. So our online guide includes a price increase of 6% to go in effective mid-March to our annual SKU. So think of this as -- this is really the flip side of what we did last year. And I really encourage investors not to think about it as a price increase. Price increase is just one mechanism for realizing incremental value to customer. So price increase ongoing, if you will, is not something that

Our next question comes from Ryan MacWilliams with Wells Fargo.

This is Chris on for Ryan. Eric, you've mentioned in the past a doubling down on the product side. And so we were curious if in the last few months, you've seen any product velocity improvements from agentic coding tools like you're mentioning. And if you're thinking about product investments any different this year compared to last year?

Yes. So a while back, right, so we all adopt AI coding tools, it's getting more and more powerful. And especially for the new product development, right, or new service, right, certainly accelerated our pace of innovation. But at the same time, we also have a lot of the existing services, right, and a lot of code written by our engineers, right? I do think that the AI coding tools is powerful enough, right, to maintain all those millions of the length of the code yet, right? So having said that, you look at not only for engineers, but also the UI designers, product managers, almost everywhere, right, we can have AI coding tools to improve our productivity. Essentially, we drive the innovation, the speed. And you look at the product area we invest. Like

Next question comes from Jackson Ader with KeyBanc.

Great. The question I have is on is around the channel. And I think you guys have made a bunch of improvements and enhancements to the channel partner program, the last few quarters and last year. And so really, I'm curious, number one, any kind of continued enhancements that you definitely know are going to be implemented here that should help for growth in 2027? And then also, it seems like -- I understand there are some kind of headwinds, tailwinds to the margin for fiscal '27. And I'm just curious, is that due to the mix of the type of investments you're making, meaning channel versus direct? Or is it just the overall amount of investments that you're making?

Yes. Let me go ahead and take that, and then Eric, you can pepper in as you see fit. Look, channel, if you think about sort of those durable elements of revenue growth is going to be essential to things like a Phone business and the Contact Center. And it's just how customers procure in that space. And also, it just speaks to beyond just the software, the consulting deployment, just how customers interact with partners. And look, we're very -- this is something we've been very intentional about, and I think you could see it in our revenue growth inflection. Look, in terms of quick couple of stats and things of why we feel great about our investments. You can see it in our large contact center wins, 9 of 10 in channel. Our channel base continues to grow. And frankly, the proportion of new customers coming from channel to me is especially exciting. The kinds of things that we're investing in to your question, look, it's around incentives. We made starting last year a lot of system capabilities and portals so that we really help enable especially to all of the product value that Eric mentioned, in things like

Our next question comes from William Power with Baird.

Eric, really encouraging to see continued progress on

Yes. That's a wonderful question. Believe it or not, actually look at the total Phone deployment. A lot of -- I think probably still more than 50%. I did not get the new number, still on-prem deployment, I mean, for large enterprise customer, right? And they deployed the on-prem phone system for a long time. And so yes, it's okay, not a great, and why they want to hurry to migrate to the cloud, right? This is kind of sort of a mentality before. Now with AI, that's a strong reason for those very large enterprise customer, they cannot lever the AI for the on-prem, right? So that's why I would say that will be acceleration for those large enterprise customers to migrate away from on-prem to cloud.

And maybe just to add the numbers to what Eric said, it's about 130-plus million seats in the cloud and about 150-ish million on-prem. So Eric is spot on, on the rough 50-50.

So lots of opportunity.

Yes.

Yes. Huge, because in order because the AI, it's hard to convince some, they say, it's okay. I use it for 20 years, it's okay. But now it's great opportunity ahead of us.

Maybe the last thing that I'd mention is just increasingly how the deals reflect it's not just Phone alone as a workload. It's that sort of wanting that whole system of action. I think that's why you see so many Contact Center, Phone deals coming together. And so as we think about large competitive displacements, I think the inability to kind of have that full portfolio is one of the reasons.

Our last question for today comes from Catharine Trebnick with Rosenblatt Securities.

A quick question on the channel. So I get the fact that you go direct with the phone and the contact center, and you did mention systems. And you did talk this quarter that you had many more deals that were bundled. So are you seeing a different buying pattern from the enterprise and the SMBs that are forcing you or maybe being more -- or the system integrators are more attractive to you? Can you peel that back a bit for me?

Your question, Catharine, is are we seeing, I mean I would...

What are you seeing -- yes, it seems like you had more bundles this quarter than you have typically discussed. So how is that changing your go-to-market motion and you're working with the different partners? Because most of the partners typically just sell the phone or the contact center. So it seems to me if it's a more complex deal that you're going to need either a direct sales force or more of a system integrator.

Yes. I mean I would say what we saw in Q4 was just an intensification of the pattern that we've seen previously, which is just what a natural sale it is for phone and contact center to come together. And then frequently, that also comes with a meetings portfolio. And look, in a lot of the deals, did they also include other great

Well, the other part is, are you seeing the enterprise want to move more towards a platform like they are in security and that you're feeling you have enough product pieces now to be part of that platform play?

Yes. I mean I'll jump in and then, Eric, you should certainly jump in as well. I do think -- and you're seeing in a lot of those large deals, those platform things. I don't think it means all of them. I don't think like anything, there's a binary answer. But maybe just as a quick data point, like if you look at our top 10 deals and contact center, 6 of 10 included phones. So I think it's just an indicator that there is both those that really want that platform, that whole system of action stitch together with AI. And then there's others that are just going to have their own technology and come at it in different ways. But look, I think maybe just to the deferred revenue conversation, I see that as a great sign. It's these all-in with

Just quickly to add on to what Michelle said. So the

Thank you. This concludes the Q&A portion of today's call. I'll now turn it back over to Eric for closing remarks.

Thank you for

This concludes today's earnings call. Thank you all for attending, and have a great rest of your day.