Tom Blakey

Tom Blakey asked for quantification of the credits mentioned in the deferred revenue guidance, their trending, and the expected impact when they expire. He also followed up on the SMB opportunity for online growth and the top/bottom line impact of BrightHire for FY 2027.

Answer

Michelle Chang, CFO, Zoom, reiterated that the deferred revenue dynamic is due to grace periods for large competitive wins, connecting it to the uptick in long-term RPO. Eric Yuan, Founder and CEO, Zoom, clarified that his excitement for SMBs refers to high-end SMBs, not individual online buyers, driven by AI's power and Zoom's rich product portfolio. Michelle Chang added that BrightHire, a small acquisition closed mid-Q4, is reflected in the FY 2027 guidance and offers natural synergies with Zoom's AI value in rethinking hiring.

Tom Blakey asked for quantification of the credits offered for competitive takeouts and their trend, and how this headwind might reverse. He also followed up on the SMB opportunity and the top/bottom line impact of BrightHire for FY27.

Answer

Michelle Chang (CFO, Zoom) reiterated that the credits are a billing dynamic for large competitive wins, reflected in the uptick of long-term RPO, and are the primary reason for the difference between Q4 and Q1 deferred revenue guidance. Eric Yuan (Founder and CEO, Zoom) clarified that his SMB comments referred to high-end SMBs (not online buyers), representing a significant opportunity due to affordable, federally approved AI and a rich product portfolio. Michelle Chang added that BrightHire, a small acquisition (sub-$100M), closed mid-Q4 with de minimis impact, but its FY27 guide reflects natural synergies in leveraging AI for hiring.

Tom Blakey asked Eric Yuan about Zoom's strategy for competing in a consumption-led CX market, given peers discussing consumption-based pricing, and Michelle Chang for clarification on online growth expectations for Q4 FY26.

Answer

Eric Yuan, Founder and CEO, discussed consumption-based pricing for Virtual Agent, noting it aligns with how customers use AI-based agents, and confirmed Zoom's ZVA product already uses a consumptive model. Michelle Chang, CFO, clarified that online revenue guidance was adjusted to 'slightly increasing' for the full year based on consistent forecast methodology and realized results, not a specific Q4 uptick.

Tom Blakey asked Eric Yuan about Zoom's strategy to compete in a consumption-led CX market, particularly concerning virtual agents, and requested clarification from Michelle Chang on online growth expectations for Q4.

Answer

CEO Eric Yuan stated that Zoom is actively considering a consumption-based model for its virtual agent (AI-based agent) technology, which is already a consumptive business model, to align with customer usage and value. CFO Michelle Chang clarified that online revenue is now expected to be slightly increasing for the full year, a tweak from previous flattish expectations, based on consistent forecast methodology.

Tom Blakey asked about the duration expectation included in the fiscal Q4 guidance. He then followed up by inquiring about the sales cycles for increasing hybrid deals, particularly whether they are expanding, and also addressed the topic of discounting in relation to extended durations.

Answer

Danielle Abrahamson, Chief Accounting Officer, stated that the Q4 guide assumes median duration will remain in a normal range. Sanjay Mirchandani, President and CEO, acknowledged variability in duration due to the mix of large land deals and new SaaS deals. He explained that hybrid deals involve sophisticated, time-consuming sales processes due to complex customer needs across legacy and cloud environments, but expressed hope that the new Cloud Unity platform and ResOps framework will help shrink decision points and sales cycles. He also firmly stated that discounting is tightly controlled and not a concern.

Tom Blakey of Cantor inquired about the duration expectations for fiscal Q4. He also asked about the sales cycles for increasingly complex hybrid deals, whether they are expanding, and if discounting plays a role with extended durations.

Answer

Chief Accounting Officer Danielle Abrahamsen stated that the Q4 guidance assumes median duration will remain within the normal range. President and CEO Sanjay Mirchandani explained that hybrid deals involve sophisticated, time-consuming conversations covering data security, identity resilience, and recovery. He expressed optimism that the new Commvault Cloud Unity Platform would help reduce decision points and shorten sales cycles, while firmly stating that discounting is under tight control and not a concern.

Tom Blakey sought clarification on AI-related revenue, asking if it was zero in 2024 and what the long-term revenue potential could be, especially given the significant increase in AI interactions on the platform.

Answer

co-CEO Roy Mann confirmed it is too early to forecast AI revenue potential, stating that the company just introduced its consumption-based pricing and needs to observe customer adoption and reaction. He reiterated that no AI revenue was included in the fiscal 2025 guidance, but expressed confidence in the value customers will find in the AI action-based model.