Zoom Communications, Inc.

Hello, everyone, and welcome to Zoom's first quarter fiscal year 2021 earnings release. As a reminder, this call is being recorded. At this time, I'd like to turn the floor over to Tom McCallum, head of investor relations.

Thank you, Matt. And then hello, everyone. Welcome to Zoom's earnings video webinar for the first quarter of fiscal 2021. Joining me today will be Zoom's founder and CEO, Eric Yuan, and Zoom's CFO, Kelly Steckelberg. Our earnings press release was issued today after the market closed and may be downloaded from the investor relations page on the zoom.com website. Also on this page, you will be able to find a copy of today's prepared remarks and a slide deck with financial highlights that along with our earnings release include a reconciliation of gap to non-gap financial results. During this call, we will make four looking statements about our market size, growth strategy, our estimated and projected costs, margins, revenue, expenditures, investments, and growth rates, our future financial performance and other future events or trends, including the guidance for the second quarter of 2021 and full fiscal year guidance for 2021, our plans and objectives for future operations, growth, initiatives, or strategies, and the impact of Zoom's business from the COVID-19 pandemic. These statements are only predictions that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to the risks and other factors that could affect our performance and financial results, and which we discuss in detail in our filings with the SEC, including today's earnings press release and our latest 10Q. Zoom assumes no obligation to update any forward-looking statements we may make on today's webinar. And with that, let me turn it over to Eric.

Matt, I think Eric's mic, there you go. Thank you, Tom. First of all, thank you all for your time today. I still remember the first time when we had an earning call last year, it was around less than 1,000 participants. Today, we have over 3,000 participants. Thank you all for your time. And I hope you are doing as well as is possible in this unique moment around the globe. To the frontline workers, we thank you for your courage and the tremendous sacrifices you are making to keep us healthy and our community running in this pandemic. Everyone at Zoom appreciates all your incredible work. COVID has brought pain for many, in particular vulnerable communities. The Black community in the United States has also recently experienced shocking and senseless loss. To our communities and customers, especially those in the black community, Zoom is standing with you, not only today, but also into the future. Nearly 10 years ago, we created a Zoom to build a better simpler and more efficient video communications platform. Today, I am proud to see that our platform is serving a critical role beyond our original vision in enabling communication and collaboration for businesses, schools, consumers, and the global community to stay connected and operational during the COVID-19 pandemic. Navigating this process has been a humbling learning experience, giving us a newfound appreciation for what it means to be a video communications technology provider in times of need. And work from home and social distance initiatives have meaningfully accelerated adoption and traffic on the Zoom video communications platform. We have seen many use cases, not only from enterprises to maintain worker productivity as part of the business continuity plans, but also from first-time consumer users for personal and social use to connect with friends and families when physical gathering is not possible. Let me share some metrics that illustrate the demand we experienced in this past quarter. Customers with more than 10 employees grew 354% year over year as we deployed millions of licenses for new customers in the quarter. When new banking customer deployed approximately 175,000 new Zoom enterprise licenses in the quarter. Usage by customers in the global 2000 grew over 200% sequentially. We peaked at over 300 million daily meeting participants, free and paid, joining Zoom meetings in April 2020. up from 10 million in December 2019. Currently, we continue to see elevated levels of participants, even as governments around the globe have begun to see same place restrictions. We had an approximately 20-fold increase in our metric of annualized meeting minutes run rate, which jumped from $100 billion at the end of January 2020 to over 2 trillion meeting minutes based on April 2020's run rate. Scaling capacity to meet this incredible increase in traffic and use cases while providing uninterrupted, reliable, and high-quality services for our customers have been a tremendous undertaking for our team. And we could not have done it without relying on our partners. When the pandemic crisis started, our own data centers could not scale fast enough to handle the unprecedented traffic. Fortunately, some of the top public cloud providers were there to help. Immediately during the crisis, our long-time partner AWS and its CEO Andy Jassy enabled us to meet this rapidly increasing demand. As our demand increased and we had limited visibility into the growth, AWS was able to respond quickly by provisioning the majority of the new servers we needed. So sometimes adding several thousand a day for several days in a row. In April, our customer Oracle also showed great support to help us. Not only did Larry Ellison record a great video to encourage our team to do the right things for the world, but also offered Oracle Cloud support. We also provisioned a number of servers in the Oracle Cloud as the demand for Zoom continued to increase. We are so grateful for their partnership and their responsibilities to provide capacity during this time. While the COVID-19 pandemic has expanded our market opportunities, it also brought us many challenges. Prior to the pandemic, zoom was primarily built for and used by large enterprises and institutions during the crisis with good intentions we opened our platform to unprecedented numbers numbers of first-time users without fully considering the challenges it would it would bring you to those who did not have full id support or established protocols for security and privacy like our enterprise customers. As a result, we have experienced negative requests related to meeting disruption, security, and privacy issues. Since these issues emerged, we have transparently and quickly addressed specific security and privacy issues, including enacted a 90-day plan initiative on security and privacy with a weekly webinar for customers to ask me anything. Acquired KBase team to add engineering expertise to build an end-to-end encrypted meeting mode. Also released Zoom 5.0 client with the new security features and enhancement to give customers unparalleled control over their meetings and data. The new release also included the support for AES 256 bit GCM encryption and ability to report platform misuse to Zoom's trust and safety team. During this period of unprecedented usage growth and negative PR, as the CEO of Zoom, I was also facing tremendous pressure and I reached out to the high tech community and received a great support from fellow CEOs and many of them are my mentors and I can't thank them enough for their advice. I'm also deeply grateful to see the strong support from a valued enterprise customers such as the CEOs from Atlassian, Equinix, HubSpot, Okta, PagerDuty, Poly, SurveyMonkey, and many others, both through public statements and video testimonials. With that, our users trust us to deliver the best and most secure video-first communications platform. I believe our results will continue to make us a stronger company for our customers and the global community. Now, let me discuss a few of our happy customers. We are thrilled to welcome Arm Technology to the Zoom family. Arm Technology is at the heart of computing and data revolution that is transforming the way people live and businesses operate. In Q1, Arm chose to deploy approximately 8,000 Zoom meeting license, 800 Zoom rooms, and 9,000 Zoom phones to deliver a one-touch experience to their employees globally. We are also very happy to welcome Baker McKinsey, one of Baker McKinsey's distinguished strengths is their use of cutting edge technologies to help clients overcome the challenges of competing into this economic world. We feel privileged to be the video communication platform of choice for the number one law firm brand in the world. Thank you, Arm and Baker McKinsey. On a final note, we welcome Lieutenant General H.R. McMaster to serve as an independent director on Zoom's board of directors, Melchemy Sankalingram as president of engineering and product, and Damien Hopper-Campbell as chief diversity officer. Bringing their expertise to Zoom will be instrumental as we navigate rapid growth, transformation, and scale. I want to commend and thank our 2,854 employees for what we have accomplished together and for working tirelessly over the past quarter to support millions of participants around the globe. With that, let me turn things over to Kelly. Oh, by the way, I forgot to mention, today is also our CFO Kelly's birthday. So happy birthday, Kelly.