Dive Brief:
- Zoom Video Communications increased its enterprise customers by 18% year-over-year reaching more than 204,000, according to Kelly Steckelberg, CFO at Zoom Video Communications, speaking during the company’s Q2 earnings call Monday, for the period ending June 30. Over half of the company’s total revenue came from enterprise customers.
- “As the majority of our revenue has shifted back to the enterprise and we have moved beyond the pandemic buying patterns, we are returning to more normalized enterprise sales cycles with linearity weighted towards the back end of the quarter,” Steckelberg said during the call. “This contributed to higher than expected deferred revenue in Q2. And as we believe this customer behavior will persist, we have factored it into our outlook.”
- Although the company’s total revenue growth was less than expected — up 8% to $1.1 billion year-over-year but below quarterly guidance — Steckelberg said the company continues to post strong growth because customers are prioritizing cloud migration and digital transformation, especially as the economy slows.
Dive Insight:
Zoom thrived during the pandemic, but as companies rethink budgets it might get left behind. Many companies have moved to a platform approach, adopting built in tools such as Google Meets or Microsoft Teams, as a way to streamline communications within their SaaS tools.
Zoom's revenue growth levels out after pandemic surge
In order to stay competitive, Zoom’s strategy relies on upselling into its existing installed base and leveraging big wins in enterprise adoptions.
Zoom touted its partnerships with organizations including UCLA, Ancestry, Optiv and Warner Bros. Discovery. The company said it accelerated UCLA’s cloud migration by adding 15,000 Zoom Phone licenses, creating a unified communications platform.
Warner Bros. Discovery partnered with Zoom to expand its meetings and phone deployment, according to the call. The partnership began before the April merger between Warner Bros. and Discovery.
Zoom leveraged its recently acquired AI-driven customer support platform, Solvvy, to partner with Ancestry. The acquisition signals the company’s commitment to providing customer support capabilities within its tech stack.
Despite thanking enterprise partners, the company reported efforts to train employees on how to sell its products better on the board and CEO level.
“What I do see us doing, though, is doing a much better job of describing and articulating the value proposition we bring to the customer and building business cases for the large enterprises so they can make a bigger purchase with us so we don’t have to discount as much,” Greg Tomb, president of Zoom, said.
