Zoom Sees AI Momentum as Enterprise Revenue Grows

Zoom (NASDAQ: ZM) hosted its fourth-quarter and full fiscal-year 2025 earnings call on February 24, 2025. CEO Eric Yuan described fiscal year 2025 as "an incredible year, marked by a major advancement in AI, the evolution of Zoom into an AI-first work platform, spanning Phone, Teams Chat, Events, Docs and more, and a strong momentum in Contact Center and Workvivo."

AI Adoption Driving Platform Evolution

Monthly active users of Zoom AI Companion grew 68% quarter over quarter, which management cited as "demonstrating the real value AI is providing customers."

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AI Companion has emerged as a driving force behind our transformation into an AI-first company, enabling our customers to discover enhanced productivity opportunities. ... In April, we're launching the custom AI Companion add-on to automate workplace [hubs] through custom agents. This will personalize AI to feed the customer needs connected with our existing data and work seamlessly with their third-party tools.

-- Eric Yuan, Founder, President, CEO & Chairman

Management outlined their pricing approach for the upcoming Custom AI Companion:

We think that the $12 price point is going to be a really compelling TCO [total cost of ownership] story for our customers, it's differentiated from what others in the market are pricing now.

-- Michelle Chang, Chief Financial Officer

Enterprise Momentum and Strategic Wins

Enterprise revenue grew 6% year over year and now comprises 60% of total revenue. The company secured a notable enterprise win with Amazon (NASDAQ: AMZN), marking a transition from Amazon's previous use of Chime.

We are excited to offer Zoom to Amazon employees and further strengthen our long-standing relationship with AWS as our preferred cloud provider. This builds on the success we've achieved helping customers easily procure and deploy Zoom through AWS marketplace.

-- Eric Yuan, Founder, President, CEO & Chairman

Contact Center Growth

The quarter included the company's largest Contact Center deal to date, with a Fortune 100 tech company deploying over 15,000 agents.

The number of Contact Center customers with over $100,000 in ARR grew over 100% year over year, with wins both displacing on-prem and leading CCAR vendors. Our AI-first approach is resonating strongly.

-- Eric Yuan, Founder, President, CEO & Chairman

Seven of the top 10 Contact Center deals came from cloud vendor displacement, with three from on-premises migrations, according to management.

Workvivo Expansion

The Workvivo employee communications platform showed continued growth, with customer count increasing 89% year-over-year and three deals over $1 million in annual recurring revenue (ARR).

Workvivo also had a record quarter driven by strength across all regions. The total number of Workvivo customers grew 89% year-over-year, accelerating from 79% in Q3. ... Our strategic partnership as a preferred migration partner for Meta Workplace has been a strong contributor to this momentum.

-- Eric Yuan, Founder, President, CEO & Chairman

The platform secured Delta Air Lines (NYSE: DAL) as a customer for their global workforce following Meta Workplace's sunsetting.

Financial Performance

The company maintained its non-GAAP operating margin at 39.5% while reducing stock-based compensation to 20% of revenue (which is still a high number, to be frank), even as it invested in AI capabilities.

We're very pleased with our margin finish in FY '25. And while we don't guide to the margin in '26, I feel good that our increased usage in AI and our spend there is going to be offset by efficiencies.

-- Michelle Chang, Chief Financial Officer

Looking Ahead

Management described the demand environment as "mixed but stable to the positive," noting record low churn rates in the online segment and sequential improvements in enterprise customer retention. The company outlined three strategic priorities for fiscal year 2026: "Expanding our AI capabilities to drive customer value; rapidly innovating within Zoom Workplace; and building upon momentum in new products such as Contact Center and Workvivo." Yuan said that Zoom's innovation engine and platform strategy are clicking, "and we have significant opportunities and growth vectors to execute upon."

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Kretzmann has positions in Amazon, Meta Platforms, and Zoom Communications. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Zoom Communications. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.