Dive Brief:
- Zoom's growth rate for enterprise revenue is slowing in an environment where customers are prioritizing software service bundles. While Zoom's enterprise revenue is still growing, up 10% year-over-year in Q2 FY 2024 earnings reported Monday, it posted enterprise revenue growth of 27% in the same quarter of last year.
- AI offerings the company is developing, including Zoom Scheduler and Zoom Intelligent Director, have the power to further drive customer growth, according to CEO Eric Yuan.
- "We think if you add more value to customers, and they are going to do more, they're likely to move on to your entire platform," said Yuan. Zoom reported revenues of $1.14 billion in Q2 for the quarter ending July 31, up 3.6% year over year, according to the company's earnings report.
Dive Insight:
Zoom is among a cadre of technology vendors fueling their platforms with AI-driven innovations, but enterprise decision-makers are a tough sell. They're looking for what features lie within their existing IT tool set rather than shopping for one-offs.
"Vendors in the enterprise space have learned that they need to do, be, and offer more than one thing," said Adam Preset, VP analyst at Gartner, in an email. "IT buyers look at bundles and value them if they can save money and solve more problems."
The full scale of enterprise adoption still hinges on what value — and risk — leaders perceive from product adoption.
More enterprise opportunities can open up for Zoom if it succeeds in conveying it can help with meetings and events, if its solutions can work together, and they can provide in-demand collaboration features, according to Preset.
But access to data, and what guardrails exist around it, also matters to executives shopping for enterprise tools.
"Vendors have to protect customer data and not oversell what AI will do for most digital workers in these early stages," Preset said. "AI may be perceived to be a new growth driver, but we are still in the phase of applying what it can do to what workers actually need. We have to temper expectations.
The provider of collaboration tools, a staple of pandemic-era hybrid work tooling, recently overhauled its terms of services in response to concerns over usage of company data.
Yuan referenced the update during the earnings call Monday.
"By putting customers’ privacy needs first, Zoom is taking a leadership position in ensuring customers can use our AI features with confidence that their content is protected," said Yuan.
The new terms of service language clarifies Zoom can access customer content for legal, security and safety purposes, but the company will refrain from using audio, video, chat or screen-sharing data to train third-party or internal AI models.
The company also added XD Huang, former Azure AI CTO and technical fellow, as CTO in June.
