Zoom CFO on earnings: We've seen 'strong performance' across all our businesses

Zoom CFO Kelly Steckelberg joins Yahoo Finance Live to break down the communications technology company’s strong Q4 earnings report and guidance for 2021.

Video Transcript

MYLES UDLAND: Zoom out with its latest quarterly report last night, blowing away estimates on both the top and the bottom line. Joining us now to talk about the latest quarter, the year, and where the company goes from here, is Zoom CFO Kelly Steckelberg.

Kelly, thanks so much for joining the show this morning. You know, I was looking back at some old Zoom releases, and I saw first quarter 2020 earnings, the full year revenue guidance for fiscal 2020, $535 to $540 million. You guys obviously did quite a bit better than that.

And I'm-- I'm just curious as a management team, how you now think about a business that's, you know, looking at nearly $4 billion in annual revenue next year, versus one that was, you know, half a million-- half a billion, excuse me-- just 18 months ago.

KELLY STECKELBERG: Well, we've seen strong performance across all aspects of our business. Our core meetings channel, direct, and online businesses all grew, as we announced yesterday. We have over 100,000 customers with greater than 10 employees. We also have strong-- saw really strong performance from Zoom Phone, which just turned two recently.

And we announced yesterday we have over 18 customers with more than 10,000 seats, so really strong performance in that market. And then of course, international, which has grown from 20 to 33% of our revenue over the last four quarters. And so we're really excited about the increase in brand awareness, and all that performance, and where that takes us forward, as we're really looking forward to the next phase of digital transformation and how Zoom has become embedded not only in our personal lives, but in many aspects of industries.

If you think about health care being provided over video, as well as we've seen, recently, court systems having procedures done via video as well. So we're really excited to see what comes next as we all think about moving back towards a more hybrid approach when the world opens up and we're able to more safely move around again.

JULIE HYMAN: Hi Kelly, it's Julie here. I'm wondering about attrition at all. Have you seen attrition in some of the customers who had signed up for paid accounts? And what kind of attrition do you expect as the year goes on and people maybe get back to their offices a bit more?

KELLY STECKELBERG: So we have two distinct channels in our business. We have our direct, and our online business. And our direct business, which is largely the up market, has continued to buy in annual and multi-year agreements. And we've seen really strong retention in that area of business.

The online segment tends to buy more on monthly contracts, and it's a little bit more volatile. And we have seen some ebbs and flows there in retention in different geographies as we've seen them able to come back to work, or then maybe seeing them go back more into a separate-- [AUDIO OUT]

We're focused on retaining them through new offers. Also, our introduction of our new platform on Zoom is really meant to address the need-- [AUDIO OUT] a platform in which to bring their customers, host their customers, seamlessly have them be discoverable to, you know, new attendees that want to, for example-- [AUDIO OUT] And so that's really--

JULIE HYMAN: Kelly, we seem to be having a little bit of difficulty with your mic. I wonder if you're maybe inadvertently hitting it as you're talking? Because I know you're very excited to talk about the business there. So just try to avoid doing that.

Brian Sozzi, did you have a question? Well, we'll give it another shot here.

BRIAN SOZZI: Yeah, no, Kelly, you know, I think you mentioned on the call last night, you have 125,000 folks-- or kids, K through 12, using the Zoom platform. How do you see that-- how do you see that evolving as children go back to school?

KELLY STECKELBERG: So as you mentioned, we've been providing Zoom for free to 125,000 K through 12 domains around the globe. And we are excited for those students to be able to go back to campus safely soon.

And what we expect is that we've seen the schools evolved to using Zoom in other ways as well, including making it easy for teachers to attend parent teacher conferences or Parent Teacher Association meetings. And that's what we expect.

And we also expect that unfortunately, it's probably ruined for students the concept of a snow day, as they can always attend school even when they're not feeling well from home. And so that's what we think is the evolution in the K through 12 of using Zoom as we go forward.

BRIAN SOZZI: You also got a lot of questions on the call last night, Kelly, about cash. Wow, you exited the quarter with $4.2 billion in cash. Now, you did say you're spending some on data centers, but how else are you going to use that cash? Are you looking at acquisitions to further build out this platform?

KELLY STECKELBERG: As you mentioned, we're really focused on continuing to build out our data center infrastructure for capacity needs as well as gaining efficiencies. We're also focused on R&D hiring, specifically on a global basis.

And then, yes, we are looking at opportunities for acquisitions to augment our talent and our technology. And we continue to look at many companies. There's lots of innovative companies out there that might be the right match for us, we just haven't found the right one yet.

MYLES UDLAND: And you know, Kelly, just finally, you guys got a lot of questions on the call about Zoom Phone and really, I guess, about the future of Zoom's relationship with big enterprises. And I thought Eric's answer, you know, talking a bit about Microsoft in the space, was really quite interesting to talk, you know, at that kind of length about a competitor, but also someone that really augments the space.

And I'm curious as you guys, you know, look at the next phase of growth, does it-- does it feel like Zoom is creating an infrastructure that a lot of other people play in? It's not like, oh, everyone has to use Zoom, but if more people use more teleconferencing software, that's probably going to rise-- you know, it's a tide that lifts all boats, I guess, a way of saying.

KELLY STECKELBERG: Certainly the advent of video conferencing being embedded into every aspect of our life has what's occurred over the last 12 months. And as you say, we think that lifts all of us. And we're really focused on ensuring that we continue to deliver happiness to our customers through all aspects of our platform.

And we are really focused on the best of breed. And that means ensuring that all of our products are really best of breed, and that then our customers can use other products as well, but that they seamlessly connect. And that's why Eric was talking about the partnership that we have with many others in this space.

MYLES UDLAND: All right. Kelly Steckelberg is the CFO at Zoom, Kelly, really appreciate you taking some time to talk with us this morning. I suspect there will be a couple more quarters of Zoom calls like this, but maybe someday soon we'll have you in the studio and we'll talk in person.

KELLY STECKELBERG: Great. I look forward to seeing you again. Thank you.