Hello, everyone. And welcome to Zoom's First Quarter Fiscal Year 2020 Earnings Release. I'd like to remind everyone that this conference is going to be recorded. At this time, I'd like to turn the floor over to Tom McCallum, Head of Investor Relations..

Thank you, Matt. Hello, everyone and welcome to Zoom's earnings webinar for the first quarter fiscal 2020. Joining me today will be Zoom's President and CEO, Eric Yuan, and Zoom CFO, Kelly Steckelberg. Our earnings press release was issued today after the market closed and maybe downloaded from the zoom.com site on the Investor Relations page.

Also on this page you will be able to find a copy of today's prepared remarks and slide deck of financial highlights that along with the earnings press release include a reconciliation of GAAP to non-GAAP financial results.

During this call we will make forward-looking statements about our future financial performance and other future events or trends, including guidance. These statements are only predictions that are based on what we believe today, and actual results may differ materially.

These forward-looking statements are subject to risks, uncertainties, assumptions and other factors that could affect our financial results and the performance of our business and which we discuss in detail in our filings with the SEC, including today’s earnings press release and the risk factors and other information contained in the final prospectus relating to our initial public offering.

Zoom assumes no obligation to update any forward-looking statements we may make on today’s call. And with that, let me turn it over to Eric..

Thank you, Tom. Thank you all. So, first of all, welcome to all of you joining us on today’s Zoom video webinar. I really appreciate. And hopefully after the webinar all of you can give us some feedback and of course we really want to leverage our platform for the future earnings call. Like a brag, I like you all what you brag on.

Please tell about what you brag on. So this is our first earnings announcement as a public company and I am pleased to report that we delivered revenue of $122 million for the first quarter, an increase of 103% year-over-year.

In addition to tremendous growth at scale, we are also pleased that our highly efficient business model and disciplined investments contributed to positive profitability and free cash flow.

Our strong first quarter results are evidence that organizations are turning to Zoom as a strategic technology partner to help them increase communications and collaboration. Since this is our first earnings call as a public company, I would like to take a step back to share how Zoom’s video first approach delivers happiness to our customers.

First, we deliver a single, easy to use platform. Second, we are 100% Cloud-Native and hardware agnostic. Third, we offer high quality service globally. Fourth, we offer robust mobile functionality. Fifth, we are developer friendly with open APIs also with the market place. We believe the growth opportunity for Zoom is significant.

Based on IDC estimates the markets opportunity at TAM is huge, $43 billion dollar market by 2022. But we believe that it is even larger than that as we are in the early stages of video becoming the new voice. Our platform is fundamentally transforming the way organizations of all sizes communicate.

Zoom is enabling far greater effectiveness and intimacy in human-to-human interactions over a distance, and we are witnessing the rapid adoption of Zoom for diverse use cases that were not possible with legacy technology. So let me give you an example of how our customers leverage Zoom platform.

One company Ciena, networking systems, services and Software Company has been a Zoom customer, happy customer for the last two years. They have built up to a full site deployment of Zoom including Zoom Rooms, Zoom Webinar and our premium audio. They have transformed how they conduct business and communicate with a video first culture.

They are currently doing more than 10 million minutes a month on Zoom platform. When faced with replacing their legacy very complex PBX infrastructure, they turned to Zoom and Ciena was very impressed with capabilities of Zoom Phone system.

So we closed a deal with Ciena in Q1 that brings their Zoom Phone licenses to 5,000 users, while significantly expanding the use of the Zoom platform within their organization. This is a great example of the trust customers have in Zoom.

Now let me discuss a few recent business and technology highlights that further reinforce our long-term growth opportunity. First, we announced that our FedRAMP authorization has been approved, with the sponsorship of the US Department of Homeland Security.

This authorization allows US Federal Government agencies and contractors to securely use Zoom for video meetings, API integrations, and more. Second, we continued to build out our best of breed partnerships with deeper relationships like HP, Salesforce.com and Slack.

Many companies, they standardize on Zoom and Slack platform, that sort of like standard for collaboration. Third, we continued to enhance our core technologies that have disrupted the video communications market. During the Enterprise Connect in March, we announced additional Smart features to Zoom meetings such as real-time transcriptions.

And fourth, we continue to enhance and extend the reach of Zoom Phone. We announced new features that enable Zoom Phone to elevate voice calls to Zoom Video meetings seamlessly, a bring your own carrier service and a new beta for Zoom Phone service for both the UK and Australia.

In summary, I’d like to thank our nearly 2,000 Zoom employees around the globe for an exceptional performance in our first quarter as a public company. Our industry leading, video-first architecture, viral adoption model, and large TAM, were also positive factors to our remarkable results this quarter.

It was a great start for the year, and we are excited about the growth opportunities in front of us. We truly believe zoom is well positioned to capitalize on the transformation of how companies communicate and collaborate with their employees, partners and customers. In many ways we are helping to drive this transformation.

The strategy that we have employed over the years to make our customers happy with a frictionless communications platform is working, and it continues to deliver remarkable results. With that, let me turn things over to Kelly. .

Thank you, Eric. And welcome to everyone joining us. Let me start by first reviewing financial results for Q1 and then I will discuss our outlook for Q2 and the full fiscal year. As Eric discussed, total revenue grew 103% year-over-year in the first quarter, to $122 million.

Some of the key drivers of our revenue performance were our acquisition of new customers and the execution of our land and expand strategy with existing customers.

Specifically, the year-over-year increase in revenue was split between subscription services provided to new customers which accounted for approximately64% of the increase while the remaining 36% increase was due to subscription services for existing customers. Here are some key customer metrics in Q1 that drove these results.

We had over 58,500 customers with more than 10 employees, up nearly 86% year-over-year. We aren't just adding a large volume of new customers though. We are also winning larger customers as a result of our enterprise focus. For example, we are excited to announce, we added new customers including DocuSign and FICO.

And customers of all size are deploying more Zoom products and users within their organizations as they realize the power of our platform. During the first quarter, we expanded our relationship with customers including Ciena and Take-Two Interactive.

The combination of our land and expand strategy, along with our growing enterprise focus, resulted in 405 customers with more than $100,000 in revenue over the last 12 months, up 120% year-over-year.

Overall, we have a loyal customer base, as evidenced by an exceptional net dollar expansion rate that has consistently been over 130% for the fourth consecutive quarter. Geographic expansion is another driver of our strong revenue growth as we continue to enjoy high demand and growth globally.

Revenue in Q1 from the Americas was up 98% year-over-year and was approximately 80% of revenue. Our APAC and EMEA revenue combined grew 127% year-over-year. We believe that this is only the beginning of a tremendous opportunity to bring the Zoom platform to customers around the world.

To achieve this, we will make additional investments to expand our global footprint and drive additional growth. Now turning to profitability. Here you can see we were profitable from both a GAAP and non-GAAP perspective, but I will focus on our non-GAAP results, which exclude stock-based compensation expense.

Non-GAAP gross margin in the first quarter was up 17 basis points to 80.9%, compared to 80.7% in Q1 last year. Our non-GAAP gross margin reflects some additional investments to increase the redundancy of our infrastructure. For the full year, we expect non-GAAP gross margins to be at the low-end of our long-term target range of 80% to 82%.

R&D expense in Q1 was $13 million and represented approximately 10% of total revenue. R&D remains a major investment area as we expand our platform with new features and capabilities every quarter. Approximately one-third of our workforce is R&D, however, it is lower as a percentage of revenue because we have a highly efficient global R&D model.

Sales and marketing expense for Q1 was $61 million, representing approximately 50% of total revenue. While we expect to realize leverage in sales and marketing over the long-term, we are currently focused on adding sales capacity to drive growth and capture the large TAM in front of us.

These investments include ramping key strategic initiatives such as expanding our global footprint and building out our initial sales coverage for Zoom Phone. G&A expense in Q1 was $16 million and represented 13% of total revenue. This includes costs associated with expanding our corporate functions to effectively operate as a public company.

Non-GAAP operating income was $8 million translating to a 6.7% non-GAAP operating margin for the first quarter. This was 8 percentage points improvement versus the modest non-GAAP operating loss in Q1 last year.

Non-GAAP earnings per share in Q1 were $0.03, on approximately 290 million of non-GAAP, weighted average shares outstanding and adjusting for undistributed earnings. Non-GAAP EPS increased three cents from Q1 of last year. Turning to the balance sheet.

We ended Q1 with approximately $737 million in cash, cash equivalents and marketable securities which is up from $176 million at the end of Q4. The significant increase in cash was due primarily to$543 million of net proceeds from our IPO and our growth in cash flow from operations.

Deferred revenue at the end of the quarter grew to $149 million, up 108% year-over-year. Our remaining performance obligations or RPO totaled approximately $377 million, up 127% year-over-year. We expect to recognize approximately 64% of the current RPO as revenue over the next 12 months compared to 68% in Q1 last year.

We were pleased with the non-current RPO growth which signals growing long-term customer commitments to our platform. Operating cash flow was $22 million in Q1, up from $3 million in the same period a year ago. Free cash flow was $15 million in Q1, compared to negative $1 million in the same period a year ago.

Both of these results reflect higher profitability and growth in deferred revenue. Before I provide the outlook for Q2 and the full year, let me reiterate our investment strategy to drive our growth initiatives.

As evident from our past results, we have both a highly efficient business model, and a proven track record of running the business in a disciplined manner. The end result has been rapid top line growth combined with positive non-GAAP operating income and free cash flow.

Our customers’ happiness and the rapid adoption of the Zoom platform are our top priorities, and we believe our focus on investing in the business will drive increased market share and future revenue growth. Now turning specifically to the second quarter guidance.

For the second quarter of fiscal 2020, we expect revenue in the range of $129 million to $130 million. We expect non-GAAP operating income to be in the range of $2 million to $3 million, with non-GAAP earnings per share of $0.01 to $0.02 based on approximately 301 million shares outstanding.

For the full year of fiscal 2020, we expect revenue to be in the range of $535 million to $540 million. We expect non-GAAP operating income in the range of breakeven to $3 million. This forecast includes the impact in Q3 of our premier user event, Zoomtopia.

Non-GAAP earnings per share are expected to be in the range of $0.02 to $0.03, based on approximately 301 million shares outstanding. In closing, Q1 was a great start to our fiscal year. We had strong execution during our first quarter as a public company, and I would like to thank the entire Zoom team for their hard work.

We delivered a combination of triple digit top line growth, increased profitability and positive free cash flow. We're also pleased with the high rate at which customers are embracing our platform. We believe this trust from customers and partners for Zoom will help drive additional growth.

I'm excited about our execution this past quarter and the opportunity ahead for Zoom, and I look forward to sharing our progress with you. With that, let's open it up for questions. If you have not enabled your video, please do so now for the interactive portion of this meeting. Matt, please queue-up our first question..

[Operator Instructions] Our first question is from Meta Marshall with Morgan Stanley. Meta you are unmuted..

Great, thank you and congrats on the quarter and thanks for the question. You gave a lot of detail on the revenue mix, but maybe versus expectations what was the biggest source of surprise during the cusp that quarter was a new customer adds, faster deployments, new products.

And then maybe turn into new products, understanding it's so early but just any further details on Zoom phone traction and whether any of the upside guide to the fiscal 2020 guidance is due to kind of Zoom phone expectations? That's it for me. Thanks..

Yes. Sure. So from product side, customer side, we do not see the biggest surprise and we work over so hard to make sure the customer happy.

And one thing probably I'd like to highlight is Zoom phone and we announced that back in January and we do have some early adopters like a Ciena admission right, they put 5,000 licenses, I think this is something I think the probably we have us more in the future. Other than that I think we just focus on our customer and the product experience..

I think we're also excited about the continued progress we're making in the up market, as you saw our customers in that segment grew more quickly than our general customer base, which we continue to be really excited about. We had a really large financial services organization become a customer this quarter which were really happy about..

Our next question is from Brad Zelnick with Credit Suisse. Brad you are unmuted..

Great. Nice to see you all and Eric nice to see how happy you are, congratulations on great quarter for Q1 as a public company. I have one question for you Eric and one follow-up for Kelly. For Eric, I appreciate that the IPO had to --have been fantastic branding events for you.

Is there any discernible impact in terms of customer ads, free to paid conversion or even top of funnel development that you've noticed since becoming a public company?.

Yes. So, Brad, first of all, I like with your back on, thank you.

I think since we became a public company I would see very little has changed and maybe it's too early to tell, but of course sure I think our company the brand is getting much bigger from our existing installed base, after became a public company I do receive so many emails from our customers and it really expressed the all the appreciation for whatever it did before with them right.

And I think from branding perspective it has certainly helped us a lot. But it's too early to tell, maybe one more quarter I can share with you more..

Great and Kelly for you, if we look at your sales and marketing expense relative to the new customer ads, it would seem that you're losing some productivity per customer.

How much of that is related to Zoom phone and how should we think about your productivity moving forward?.

Yes. So we are really focused this year on continuing to hire in international and for Zoom phone. So you are going to see some impact initially as it takes a while for all those reps to get ramped. And I think when you start to get to the back half of this year early next year you should see that taking hold..

Our next question is from cash Kasthuri Rangan with Bank of America Merrill Lynch. Kash you are unmuted..

Hey, Zoom team, thank you so much. I'm very happy to be joining your video conference call. I had two questions for you.

One with respect to the quarter what were the one or two largest deals the company landed in the quarter? And what were the competitive dynamics and also the nature of the topology of the customers, IT infrastructure against which you were able to win this a big deployment? And secondly, you just talked about the overlap on the phone side, how our customers making the phone decision? Is it in conjunction with the video decision or as a separate standalone capability? How are they making that evaluation? Thank you so much and congrats..

Yes. So about your first question, feel free to tell me about some large customer required in Q1. I think you look at a competitive landscape in Q1, I do not think there are any changes because most of our legacy players still with old solution with old architecture.

And I didn't see anything new from our legacy competitors in terms of innovation or some innovative go-to-market model and everything else I think it remains the same. .

So we were really excited. We had four deals in the quarter that were over a $1 million ARR and unfortunately can't close the names of most of those, but one of them is a really exciting large financial institution. We're thrilled to have as a new customer and a couple of them were up sells. So positive traction I would say on all fronts in that area..

I think Kash was on the decision to --.

Yes, for the second question, Zoom phone, what drive that decision-making?.

So for -- when we look at our go-to-market strategy for our Zoom phone system, we focus on our existing installed base because they already trust us, plus they all use of video, they all use the voice. They realize our quality. Customer told us, hey, you just added a phone number right, they do not even use any other phone system.

Customer like the quality, a unified collaboration experience and ease of use and plus some individual features like seamlessly obligate your phone call to the video call and the customer really like that experience..

Our next question is from Sterling Auty with JP Morgan. Sterling you're unmuted..

Alright, thanks. Hi, guys. Eric, one of the questions that I consistently got through the IPO and post is the direction of the [Ucash] stage and specifically with a lot punches Zoom phone it looks like you are actually in a competitive direction with RingCentral yet you announced the extension of your partnership.

And also get questions over whether you need to actually own some of the technology that you see out of Slack.

So just directionally how do you see your partnership and competition in directionally what technologies you need to own versus partner going forward?.

Yes. Sterling, that's a great question. So if you look at it what's happening in those -- in the industry and also when we talk with customers they take a Slack upon Zoom, Slack and Zoom I think the best of partners and a lot of companies standardized on Slack and Zoom, right. It's almost just become a standard right.

It's very important but we look at it user space like a video and a phone and we started from building a platform and our first application good upon that platform is video conferencing and however customer realized our voice over IP quality, it's not very hard for us to edit a phone system into module phone system, we build our own technology from the ground up, it's modern architecture compared with any other phone system right.

We did it from the group up and customer really like that experience from a phone to the video and video to the phone is one unified collaborating space. .

Alright, great. Maybe just one follow-up.

I do get questions over the US-China relations and things that are happening from that perspective given the large R&D presence that you have in China, does anything change in terms of how you're managing that aspect of the business?.

I don't think anything change especially if you look at our whole R&D down here in our headquarter office in San Jose. And then plus we're similar to a lot of other companies who might have office there. I think we do not have enough revenue. We do not have a big business there in China. And I think --I do not think there's any impact right.

So we have very, very good, the process here in terms of how to manage office or team and we have a high confidence. I do not think there are any changes in Q1..

Our next question is from Matt Hedberg with RBC. Matt, you are unmuted..

Hey, guys. Thanks for taking our questions and I love this new interface, hopefully other companies will maybe embrace the same idea for earnings calls. Kelly, I want to start with you, obviously, stellar results from the top line and bottom line and you've got a lot of success in international regions.

Can you walk us through how you think about balancing growth and profitability? And I guess specifically how do you think about deploying direct sales reps out into the field? Especially as you're having more success in larger deals..

Yes. So we are really focused on investing in both R&D, as well as sales and marketing canoeing to build out the product, as well as expanding internationally.

And if you look at our overall sales hires for this year about half of them are international which means as a percentage those sales reps are going to grow much more quickly than the US-based reps we have so many more here today.

So I think we mentioned this on the roadshow but we recently hired a new Head of International, Abe Smith and he's really helping accelerate our business there. So I think you'll continue to see strong results there..

That's great. And then maybe as a follow-up, in addition to the RingCentral partnership, Salesforce.com is a good partner of you guys as well and participates in the IPO.

Can you talk a little bit about that relationship and how embedded is it today? Because it seems like there's obviously a logical integration point between those two -- between yourself and Salesforce?.

Yes. So, Matt, you are right on. We are huge fan of Salesforce.com service. Our team and I believe within the Salesforce platform but quite often when you use a Salesforce and a Zoom, the integration do not stimulus. Our system manager really wants to understand what's going on for the Zoom meetings with the customer with the prospect.

And they need to go back to the Zoom and what a week our meetings over, we automatically edit a transcription back to Salesforce portal, right. With that customer can leave within Salesforce portal.

I think we have to do need more partnership, integrations with Salesforce.com which we truly believe I think the sales team in the future, they are going to either live within salesforce or they can use Zoom, but they do not feel like -- they are using two different solutions right. Some of these integrations can truly help the sales productivity..

Our next question is from Pat Walravens with JMP. Pat you are unmuted..

Great, thank you and congratulations you guys. Eric my question is for you which is, I love your whole focus on delivering happiness. And I'm wondering given how fast you're growing how are you going to make sure that your employee stay happy so they can keep your customers happy? That's the first part.

And the second part is there as much of an opportunity around Zoom phone as there was around meetings? Because just our -- the meetings areas such a disaster before you guys came along. I'm not sure the same level of, yes, right. And I am not sure there is same level of pain around the phone. So those are my two happiness questions..

Yes. So, Pat, first of all, I think you are reading my mind very well and the first question about a company culture, if there's a one thing that keeps me up in the night is about a company culture. Before we have 1000 people I think I can remember most of the employees name.

I never spend a minute on the people related issues, experience is great for now we have almost a 2,000 employees, quite often I need to spend time to deal with those people, you might have greater issues or maybe a sexual harassment and we needed that let them go right.

It's not that easy, however, we try to do all we can to make sure that open, transparent culture. We just hired our Chief People Officer. We just launched the employee survey try to understand where we can improve. So we are very paranoid. We do all we can to make sure every employee happy every morning.

If they are not happy we would like them to stay at home to figure out a root cause and either tells us what had happened and helps us to fix the problem. Again this is something not very easy. We keep an eye on that. We take it to that very, very seriously. Regarding your question, you're right.

Before we build another Zoom platform, I build web as before right. I did not see a single happy web at customer, you're so right but when it comes to a phone system, you look a lot in device today, most of them are still using like complex old-fashioned on-prem systems but for the full system, and were hard to maintain and also quality not as great.

Plus the phone system like a Pat I call you, we still talk on the phone, really cannot upgrade of video experience, but Zoom can truly have that and if you deploy Zoom phone system, I'll call your phone number one more click we can upgrade to a video experience seamlessly. I think the customers really like that..

Our next question is from Alex Kurtz with KeyBanc. Alex you are unmuted..

Sorry about that. So, hey, guys. So just on the on the Cisco front, they've made some big efforts in the last six months to revamp the platform, the WebEx platform. They've done some integration at a high level. They've added some AI functions at least from a marketing perspective that's been out in the marketplace.

So I'm just wondering during the quarter has there been any change in their competitive posture especially in the Global 2000. Then I had a follow-up question for Kelly..

I think Cisco right on. They made -- I assume right decision to put on AI, but we already started AI effort two years ago. And like first feature were announced almost two years now right, so which is meeting transcription to lever AI platform after the meeting is over we can automatically generate the meeting transcription.

We are going to [adopt] on that as well because we already started at two years ahead of any other competitors..

Okay then Kelly just around the Zoom phone contribution to the updated view for the fiscal year.

I guess at this point we're not calling out any kind of like contribution at this point right?.

That's right. We're really excited about the momentum that we saw in Q1 but we're still at such an early phase that we expect it to have kind of minimal overall contribution the way that we're forecasting it for the full year..

Our next question is from Tom Roderick with Stifel. Tom you are unmuted now. .

Hey, thanks for the [chat], that's a question and congratulations on the IPO. I'll second Matt's earlier comment with regards to kudos on the format. I think this means you can't make faces at when you don't like our questions any more. May be good or may be bad for you.

Eric, I'm going to start with you just on the topic of the IPO and taking back to when you started this the days of bootstrapping this company. You probably didn't foresee today when you have over $700 million cash in your balance sheet. So a bit of an embarrassment of riches.

What do you do with all? I know the easy answer is everything but I'm sure as a backdrop of that is investors probably want to understand it just suddenly made you an acquisitive company.

Do you want to someone rate the advertising and international markets as you have this big pile of cash? How do you think about -- how you want to deploy it now you focus your resources?.

So, Tom, you can ask these questions to my wife as well because I have a no idea how to spend money. I would like to refer to our CFO. .

That's funny. Well, I think it's probably thanks to Eric that we have this cash because of what he just said, but we are continuing to invest, Tom. Certainly as I said mentioned before in R&D and sales marketing.

Those are the two key focus areas and then while we haven't been acquisitive historically, Eric and I have talked a lot about this that we will keep looking for companies that we think could elevate our company in terms of technology or potentially personnel if that were needed. So we're keeping our options open at this point..

Fair enough, okay, good. Quick follow-up from me just in terms of the enterprise selling motion here and looking at the numbers, I mean the number of customers you've landed greater than 10 employees up over 80% but the enterprise contribution, they're up over after 120%.

So as we think about the selling motions you get reps out of the field as you deploy more products. Can you just talk about how that selling motion has changed and how you'd like to further change that as you added layer more product in to the next? Thank you..

Yes. So certainly our enterprise cycles differ from like our SMB approach. And it's really interesting as we've seen a wide range of selling cycles in the enterprise. For example, one of our largest customers went from beginning to end in six weeks that was really a forward-looking CIO that embraced the need to digitize their platform.

I will say that is not typical though. Most of our enterprise customers, they are what you expect more traditionally they have a proof-of-concept. They have pretty extensive user acceptance testing.

I think what happens is once it's in the hands of the users though and they see there's a love for Zoom that drives the demand which then from that stage usually goes pretty quickly to close..

Yes. And in particular for every enterprise customers normally we started from land and expand experience, right. We never wanted to let enterprise customer deploy Zoom with a full site is [brought on the one]. We like this bottom-up approach. That's why it will take some time but it's very healthy if you look at our pipeline..

Our next question is from Zane Chrane from Bernstein. Zane, you're unmuted..

Can you hear me? Okay, great. Eric, Kelly, Tom, hi. Congratulations on the successful IPO, very nice to see you on the first earnings webinar. I have a question on your strategy for capturing marketing industry verticals. I know for example healthcare, telemedicine very rapid growing field.

I understand from people in the industry that Zoom is really one of the only platforms; it's not for typical finance that ties in with the existing major electronic medical records. That seems to be maybe an underappreciated mode in that industry.

How should we think about other examples such as that they have been in different industry verticals and how do you think about developing those industry strategies?.

I think you are right on; it comes to vertical industry opportunity, huge opportunity. However, we just cannot speak on that. The reason why, if you look at our video collaboration, the full system also the huge opportunity back to the $43 billion opportunity. For now, we also wanted to explore some ideas.

That's the reason why we introduced the marketplace, make sure it speaks about our platform to let us sort of partners developers to build those application force based on our platform for whoever whenever we are ready.

I mean you want a number on both video conferencing and a full system and are in working to top down on those vertical industries, huge opportunity you are right on.

Is there any question?.

And I was running have you guys had any work, doing work on quantifying how TAM expanded Zoom? It seems like Zoom is very kind of similar to a lot of other industries changing companies where a company comes in with a better product, easier to use, lower cost reduction, superior functionality.

Is there any sense you have forged how much that's increasing the usage of video conferencing among knowledge workers or what multiple that is on legacy habits for video conferencing?.

So you look at the knowledge workers today worldwide more than 1 billion knowledge workers, but today if you look at the video usage, it is still very small. I think I just spoke on today's TAM, $43 billion of market size; we do not lose the focus I think it will keep us very busy next several years..

A huge opportunity, so congratulations, best wishes. .

Our next question is from Jonathan Kees with Summit Insights Group. Jonathan, you are unmuted now..

Great. Thanks for taking my question. I hope you can hear me here. I'm having trouble with my video here. Congratulations on the quarter. And I just, yes, I wanted to ask more of a modeling question. You've talked about for the quarter -- for the year, the top line and bottom line, just curious how we should think about cash flow.

At the very least you can give us direction in terms of CapEx. And, yes, how we should model that for the year? Thanks..

Yes. Thanks for the question. We are not going to provide guidance around cash flow but given the opportunity that you're seeing in the top line, I think you should think about that there is a positive impact on cash flow due to that.

And given that we're assesses in what you can see is happening also with the change in defers, I think you should think about that and what the impact it's having on cash..

Yes. Also please let me know your mail address. I will mail you our new camera..

Okay, all right, I look forward, yes; we don't normally have video meetings. If I can sneak in one another question, this is more of a high-level. I guess I'm trying to reconcile the $43 billion TAM, talking with your task peers they're also pretty excited about the expansive TAM and how it's untapped and they're just a lot of potential upwards.

I guess the TAM that they talk about and obviously this is for the voice, but also includes like contacts and even video. The TAM that they've talked on this even includes RingCentral, if you include contact center and maybe video you can get up to like around $40 billion in TAM.

I guess I'm just trying to reconcile if you can help me here between the TAM that you talked about and the TAM that your peers talk about..

Yes. I mean the way that we, what we did we looked at IDC's approach and it's even a bigger TAM of like $60 billion but we looked at it and back down into the areas we could address with our platform today. And it is estimate by 2020 it's going to be at that $43 billion number.

And I think the other thing you should think about which I don't know if you mentioned exactly as you talk about but also Zoom rooms which are a really important part of our platform and addressing the whole conference room is something that Zoom can do very uniquely because of our hardware agnostic approach.

That there's a significant opportunity there that I'm not sure any of our competitors are addressing completely or maybe talking about and are --we're super excited about that opportunity. End of Q&A.

That is last question..

Okay, wonderful. Well, thank you everyone. Thank you for joining us by video. That's great and we will look forward to speaking to you guys again. Thank you..

Thank you..

By the way, please do send out your feedback. We really want to leverage Zoom Webinar for the future earnings call. Thank you so much for time. I really appreciate. Thank you very much..