I really do not think we need to work over five days, because literally we all will employ so many digital agents, right? And I think we all have more time for human-to-human interaction like this.
This isn't a disagreement, but I think to build on that, I think about it less as the quantity and more of like what it will feel like.
I have to start with something I only learned recently, which is that you had your digital twin, your AI digital twin, do an earnings call instead of you.
That's right. Anybody else seen that before? Any of you do have prepared remarks only. I felt compelled to.
I did the twin can join today's session. I can stay at home, so. Well, we're very happy to have you here in person. But why did you do that?
Actually, literally it did save me a lot of time. Remember, since we became a public company in 2019, every time doing the quarterly earning call, guess what? I needed to either record a script or read a script. I hate that. I do not like it. And later on, we developed our AI technology. For now, I can tell you I truly enjoy our quarterly earning call. I just join our earning call.
You just listened. No, for live Q&A. And Michelle, she's going to talk during the whole session. I join for live Q&A. You didn't answer any questions, though. You could have.
It could have answered questions. Yeah, live Q&A for questions. But the screen part, right? I can leave it to Zoom, you know, video clips. Right? To play around my video clip.
Michelle, did he ask you about whether this was a good idea before he decided?
He called me and I have to say I was a little skeptical, but I actually think it's as always. I know, we have that dynamic. But yeah, it was a good choice, actually. It was a fun way to get the message of our product out. And you know, look, it strikes that right balance that I think we've been talking about about like the in-person, the Q&A that really matters is still human-to-human dialogue.
And does he ever send his digital twin in to meet with you for a meeting?
He has. I haven't figured it out yet.
No. She does not accept my invitation, so if I send her my digital twin.
So, you know, you're speaking to an audience of CFOs here. Tell me what you were looking for when you hired Michelle.
Oh my gosh, I should write this down. So, it's great experience working together with Michelle. So, I look at it for the, you know, Zoom in the total of the journey, right? You know, how to grow a business from a $5 billion company to be a $10 billion company, right? And being a founder and a CEO, quite often I look at it, you know, top line growth, bottom line cost control, customer interaction, product, employees. A lot of work. I really want to have a business partner. Essentially, more like a co-CEO with a deep financial background.
So, you think of her as almost a co-CEO?
Yeah, because so, is she your number two? Yeah, absolutely. I don't want to embarrass you here, Michelle.
Yeah, it's very deep, you know, the financial background. Essentially, look at it the what Michelle does every day, I think very similar to what I'm doing. Right? Top line, bottom line, you know, product, you know, business strategy, and employee, customer, you know, very similar, so.
Does she ever say no to you?
Oh my god, this is quite often, so. Wait. I can tell you, whenever we hired a new executive to join our e-staff meeting, for the first few weeks, always wondered what's happening for your e-staff meeting, because we debate heavily, right? During our e-staff meeting, because, you know, we trust each other. We want to be ourselves. You know, quite often, I do not like to say everything always say yes, always say no, right? It's kind of a challenge each other with her, you know, great background working for Microsoft so many years, deep financial background. It's very healthy dialogue.
Yeah, so let's talk about that, Michelle. I mean, as Eric said, you were working for Microsoft, not a bad company. What attracted you about this job?
Yeah, I think Zoom experience better. Yeah.
On that one really quick, fun little side story. When I'm in the airports, I don't think once in 24 years somebody ever stopped me to say how much they love a company. And without fail, probably at about 30% hit rate, people stop and say how much they love Zoom. And I think it's a testament.
Really? Emotional connection. They have no idea who I am. So, this is not like anything where the title, but I think it's because of the love that Eric has kept the customer at the center of a lot of things, so I give Eric a lot of credit for that. So, I picked up the call cuz I knew that it was a great company and it came to the world's needs. But honestly, what kept me sort of talking to Eric was a lot of what he described in Zoom 2.0. And a sense that like I could have a lot to learn, which is really important to me. And that I could help in some way.
I guess your kids also use Zoom, right?
That's all they did in the pandemic, but we were also a heavy Microsoft shop at that point. I was the team CFO during the pandemic, so.
Could you use Zoom? You couldn't use Zoom. You weren't allowed to use Zoom, were you, at Microsoft?
All right, but let's talk about that Zoom 2.0, because we all know Zoom. Yeah. Thank you. Yeah. Zoom 1.0. I mean, it was an incredible experience, and I want to come back to the experience of the pandemic, cuz I'm curious how that affects a company to be on a roller coaster ride like that. But leave that aside for a minute. Tell us where we are going in Zoom 2.0. What is your vision?
So, maybe I should take a step back to look at what I'm doing every day, right? No matter how many hours you work on anything, essentially, it really comes down to two interactions. Human-to-human interaction like this or Zoom call or the human-to-system interaction.
Yes. Like your CRM, email, chat, any computer system, right? Human-to-system. I think for now, most of the time to complete a task, it will need a two-step process, right? Human-to-human interaction and then human-to-system interaction.
Yeah. I think in the AI era, the human-to-system interaction, by and large, will be replaced by agentic interaction. Meaning, agent can help you to log into your back-end system, get a thing done. But human-to-human interaction will remain the same. And so, what that means, if I understand you correctly, so I'll be on a Zoom call, and we will agree on something, and the Zoom call will then take that action for us, whether it's go out and buy something or log it into the CRM or send an email to someone, it will happen automatically without the second step.
Exactly. That's why I say our vision is to transform our business being a communication company to a system of action company. Essentially, more like from conversation to completion. Meaning, after the Zoom call is over, we generate transcription, summary of the insights, and leverage workflow or agent to automatically update the back-end system.
Yeah. And how far are you from that vision?
We already have those features building. Just announced literally last, you know, I think recently at Enterprise Connect.
And Michelle, we've had a lot of conversation over the last couple of days about how talked with Jeff Hoffmeister from Shopify, for instance, about how this AI transformation often leaves the CFO sitting at the center of critical decisions, because people who want money for investment on some new project have to come to you, and you have to decide, is this something AI should do, or is this something people should do? How do you deal with that?
Well, I think you know, what Eric said about kind of our relationship, I think it's in part kind of the role, but it's also like there's not that many people at a company that can see left to right across everything, you know? Often times, you know, kind of your discipline. And so, having people that can see a company from one end to the other, you know, allows you to kind of be able to look and say, okay, how do you both get tops down kind of pressure to get on AI? How do you start virality? How do you think about the return that Eric and I are going to have to talk to investors about? And so, a lot of it I think is we tend to go to forums like this, and then we come back and we compare notes about where everybody else is and how we're tracking. And look, Eric takes lead, obviously, on the R&D side and how we implement AI there. And I take lead in kind of the areas where the financials are more in front and center.
So, one thing that has been a big topic with this group for the past year has been the question you just raised, the ROI. How important is that? Of course. How important is that to you? Or do you think like, well, we can wait a few years to get to that?
I mean, I would say for us, we sort of have two sides. Like, what's the return of our AI from a top line perspective, cuz we're obviously selling, and that means you cannot lose sight of business value from a customer. All of us are going to stare down, you know, proposals at some point and want to know what the value is. So, there's that. But, in terms of the cost-cutting, and I think it's a lot of like okay, where does an AI naturally play? Where do we have large costs? Where is the industry sort of seen early fruit? And like we then go. And for us, the formula looks something like customer support. That's also a product that Zoom sells. So, we get to be customer zero in that journey. Sales, another big cost center. What does the AI in sales look like? What does it look like in terms of product development? And then there's sort of the general employee productivity piece.
Good news, whenever I request more budget to spend on AI, Michelle very supportive because not only do we look at it the short-term return, but also look at long-term ROI. That's even more important. So.
And how has this transition to AI affected your head count?
We're flatish in head count. I think we're also going through this reinvention that we talked about. So, I think in the fullness of time, we'll be slightly down. But, look within that, there's a lot of shift. Right? A lot of shift to higher value work, a lot of shift to different roles and functions. And so, I think, you know, it's sort of misleading to just leave it at a flatish.
I want to just put all of you on notice. I want to leave a lot of time in this segment for you to ask questions. I think Eric said he wanted to answer questions from the CFOs. So many great CFOs here, why not? So. Right. Maybe customers. Yes. But let's go back to this vision for the future because you want Zoom to be the agent that gets work done within the enterprise. You're not the only company that wants that.
Because again, as I said, right? To get anything done today, literally, you need a two-step process or two interactions. Human-to-human interaction, human-to-system interaction. We are uniquely positioned as a winner, right, for human-to-human interaction. The human-to-human interaction essentially becomes the user interface to get a thing done. The human-to-system interaction, that interface will be replaced by agent.
So, you're capturing the data at the front end that way.
I mean, my Microsoft Teams might have a somewhat similar bit. No, which experience, you know, better than customer probably than, you know, leverage that more, right? So, as long as we keep innovating, customer embrace Zoom more and more. And after the conversation is over, agent can interact with the system. So.
And how do you think about human in the loop in this process? I mean, you can go that the agent who's on that call can go do things very quickly if you want them to. But, how are you what kind of controls are you putting in the system?
First of all, you got to make sure human-to-human interaction, that's seamless, right? That's very important. The second thing is before you delegate to agent to update your back-end system, you as a human being, you need to validate the data. We I call it the context window. Like for human-to-human interaction jumps to the human-to-system interaction, in the middle, you have a context window. You need to make sure somewhere in the middle of that to validate the data. So, it will say, 'Do you want me to send that email? Do you want me to put this in the CRM? Should I order that box of things?'
Yeah, you need to look at all the data make sure this is right data. And then one click to submit. So. And you say most of these tools exist in Zoom now?
Absolutely. Literally, I'm using that every day.
And are your customers using it?
Okay, yes, some beta customer. And also we announced at Enterprise Connect. And we have a new release April 20th, another release on May 11th. And you know, further promote those services. So. And our finance team is using it.
Your finance team is currently using it. And how has it changed the way the finance team operates?
I mean, I fundamentally, as a CFO, let me start there. I prepare for earnings significantly differently than I used to. In terms of it helps me tighten answers. It helps me curate. It helps me predict.
Will it create PowerPoint slides for you?
Sure. For sure. Sure. We use it. Time and I use. Well, but like on the so we use a lot of different AI tools. But, on the Zoom ones, like for our SOX control, we use it to scan over transactions, look for risk, highlight things that we wouldn't have otherwise seen, begin to write audit and reports. So, we use it a lot in risk control. We also use it a lot with our customers. Our customers used to have really in-depth tax questions for us that actually were clogging up a lot of our customer interactions and some dis-on. And so, we built together with what Eric's talking about, we built sort of an agent to help answer those and get customers what they need faster.
So, it gets back to that customer zero thing you were talking about earlier. You guys start with it yourselves. Yeah. Questions for Eric. Yes, please.
Eric and Michelle, thanks so much for being here. I have a bit of a two-part question. The first question is around capital allocation. How do you balance the discipline of innovating and investing in innovating while at the same time making sure that the core business is producing the cash needed to fund the new innovation? So, that's kind of the first question. The second question gets into competitive moat. As you think about the agentic dimension of your new strategy, Zoom 2.0, how do you think about building agentic in-house versus partnering with some of the big players that seem to have a lot of experience across multiple industries? So, how does that play into your equation about competitive moat, building in-house versus outsourcing?
Yeah. How about I address the second one. You address the first one.
On the capital allocation, look, we go through a long-range planning cycle where we talk quite a bit as a leadership team about, you know, how do we get to the long-term goals that we want? And then, you know, every quarter or every year, we kind of go through an exercise where it's like, what are the priorities of Zoom? Right? And I think that's like the most fundamental question to answer with capital allocation, right? If you know that this is what it's going to take to get you where you want to go, what then are the priorities for the next, call it, year, two years? And really, those priorities, we debate the name quite a bit. We had a quite a vigorous debate amongst our leadership teams of which ones rose to the surface and all of that. But, there's something so healthy in that. And then, basically, that serves as our frame for how we talk to investors about what we're prioritizing. And then, every dollar and head count and that gets sort of moved into that frame so that we can zoom out, no pun intended, and be able to look at, you know, is our money where our mouth is in terms of what we say our priorities are dollars going there?
So, back to your second part of the question. So, you look at the Zoom journey, but in the last we're more like a conversation company. After meeting is over, it's over. You do not have any data generated out of the meeting. In 2.0 journey, you know, we already generated transcription summary for a while. Recently, we have launched a cross-platform My Notes. So, essentially, almost every meeting is over, you have some data. Those data very important for the AI, you know, for the agentic framework or workflow. And also our agentic framework is open, right? Meaning we embrace other system like Anthropic. At same time, also offer agentic framework to customer as well. So, you can.
I just to make sure I understand. So, any you can integrate Zoom with any agent?
