Q1 2025 Zoom Video Communications Inc Earnings Call Transcript
Key Points
- Zoom Video Communications Inc (ZM) reported total revenue of $1.141 billion for Q1, up 3% year-over-year, exceeding the high end of their guidance by $16 million.
- Enterprise revenue grew by 5% year-over-year, representing 58% of total revenue, up from 57% a year ago.
- Zoom Contact Center saw significant growth, reaching 90 customers with over $100,000 in ARR, representing a 246% year-over-year growth.
- Zoom Phone continued to expand upmarket, now having 5 customers with 100,000 or more Zoom Phone seats.
- Operating cash flow grew 41% year-over-year to $588 million, and free cash flow grew 44% year-over-year to $570 million, with margins expanding to 51.5% and 49.9%, respectively.
- Online average monthly churn increased slightly to 3.2% from 3.1% in Q1 of FY '24, attributed to tightening the grace period for unmade payments.
- APAC revenue declined by 2% year-over-year, primarily due to FX headwinds in Japan and Australia.
- Non-GAAP gross margin in Q1 was 79.3%, down from 80.5% in Q1 of last year, mainly due to investments in AI innovation.
- Deferred revenue at the end of the period was $1.35 billion, down approximately 1% from Q1 of last year.
- For Q2, Zoom Video Communications Inc (ZM) expects revenue growth to be only around 1% year-over-year, indicating a potential slowdown.
I will hand things over to Charles Eveslage, incoming Head of Investor Relations. Charles, over to you.
Thank you, Kelcey.
Hello, everyone, and welcome to Zoom's earnings video webinar for the first quarter of fiscal year 2025. I'm joined today by Zoom's Founder and CEO, Eric Yuan; and Zoom's CFO, Kelly Steckelberg.
Our earnings press release was issued today after the market closed and may be downloaded from the Investor Relations page at investors.zoom.us. Also, on this page, you'll be able to find a copy of today's prepared remarks and a slide deck with financial highlights that, along with our press release, include a reconciliation of GAAP to non-GAAP financial results.
During this call, we will make forward-looking statements, including statements regarding our financial outlook for the second quarter and full fiscal year 2025; our expectations regarding financial and business trends; impacts from the macroeconomic environment, our market position, opportunities, go-to-market initiatives, growth strategy and business
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