Zoom’s annual analyst event, #ZoomPerspectives2024, took place three weeks ago in New York City. The event was right before my long, much needed vacation which kept me from writing this blog earlier. Perspectives was more than a showcase of Zoom’s latest updates and new features; it was a deep dive into the company’s transformative journey and its long-term view on growth opportunities, which were well-articulated by its visionary leader Eric S. Yuan (he / him / his) and the senior leadership team. I walked away with a new “perspective” on Zoom and its rapid transformation from a video meetings company to a complete collaboration and productivity software vendor. Here are my key takeaways:
Zoom Goes Far Beyond Video Meetings
Zoom is firing on all cylinders to meet its goal of becoming an end-to-end collaboration and productivity software provider. Its product portfolio has grown rapidly and is now built on two key pillars: Zoom Workplace and Business Services.
Zoom Workplace: An end-to-end communications suite for meetings, chat, phone, email, calendar, docs, whiteboard, rooms, workspace reservation, employee engagement, and more.
Business Services: Includes Zoom Contact Center, Zoom Events, and Zoom Revenue Accelerator.
The entire platform is encapsulated within its AI-first approach, with Zoom AI Companion extending across the platform and available to customers at no additional cost. With this multifaceted product transformation, Zoom is even evolving its slogan from “Meet Happy” to “Work Happy.”
From AI-Powered to AI-First
AI Companion has grown significantly in the eight months since launch and is now used by over 700,000 customer accounts. AI Companion is an umbrella term that Zoom uses to address a set of AI capabilities available today across eight different products, rather than referring to a single product or feature. By integrating AI from the ground up across all aspects of its platform, as well as the more than 2,500 partner applications that are part of its open ecosystem, Zoom is creating a comprehensive AI-first strategy. Clearly, this is an area where Zoom faces stiff competition from Microsoft and Google. However, the company is differentiating itself in a few ways:
- By making AI Companion available to all paid Zoom licenses at no additional charge, Zoom is ensuring that its approach to AI does not create islands of haves and have-nots. As customers push forward in their own AI journeys, their investments are growing beyond the capabilities included in AI Companion. Zoom is seeing growing revenue from higher-tier packages that allow customers to lean into its premium AI SKUs that are focused on creating a differentiated value for specific personas and workflows.
- Zoom is leading with end-to-end simplicity, all the way from procurement to ease of use and management. Simplicity and intuitiveness have always been critical to Zoom’s success, and it keeps doubling down on these aspects as a key advantage.
- Zoom is emphasizing its commitment to responsible AI, by not using customer data for training models and prohibiting third-party access. At the event, it stated that the successful deployment of AI Companion across all products has led to increased customer trust and confidence in Zoom’s ability to provide customers with fine-grained controls over AI features.
- Zoom’s AI approach is built on three key tenets—amplify users’ skills, simplify workflows, leverage company-wide data, and delegate complex tasks through automation and AI agents. The last aspect of delegation is where things could get really interesting. It’s a forward-looking vision for Zoom and the rest of the industry. Though this did not come up at Perspectives, Eric Yuan’s recent statements around creating digital twins in the future, that could attend some of our meetings, read emails, and take over many manual tasks is an interesting possibility of how far AI can go with delegation. Though he clearly states that this is out by a few years, his vision points at AI’s potential across many interesting and maybe daunting scenarios. However, it remains to be seen if the average user will be ready to take that big leap of trust when we get there.
Workvivo is a New Growth Vector
The session by Workvivo executives Gavin Wrenn and Andrea Graham, were presenting at Zoom Perspectives for the first time since acquisition, created a lot of excitement. Employee experience (EX) is top of mind in the hybrid work era and it represents a high growth, net new opportunity for UC vendors. Workvivo is now integrated with the Zoom client allowing users to click on the Workvivo icon to see the latest company announcements, posts and shout-outs. Workvivo’s breadth and depth of features and the roadmap are impressive and a differentiator in the crowded unified communications space.
An area where Workvivo wins is in frontline worker enablement. Frontline workers do not have access to the same communications toolkit as knowledge workers, and Workvivo’s software is helping frontline and deskless workers stay informed and engaged. The team also highlighted its immediate growth opportunities from Meta Workplace customers. Meta recently announced that it is shutting down its Workplace platform and has selected Zoom as a preferred migration partner for Workplace from Meta customers. With more than 7 million Meta Workplace users today, this creates a clear growth opportunity for Zoom. Going forward, expect to see some exciting features and innovations, as Workvivo and Zoom work together to bring to market deeper AI capabilities and advanced analytics for employee workflows, particularly for frontline operations.
Growth in Zoom Phone and Contact Center
Zoom Phone is an area of continued growth. Zoom has seen noteworthy success with over 7.7 million seats sold. Zoom is also doubling down on strengthening its contact center offering. At the Perspectives event, Zoom stated that its contact center is ready for prime time. This represents an evolution of the product based on a more advanced feature set, integrations, greater uptime, and built-in AI features that have collectively boosted sales. In its FY Q1 25 earnings Zoom announced that it has reached 90 customers with over $100,000 in ARR, representing 246% YoY growth. This was driven by a combination of recently launched higher pricing tiers as well as success in winning larger deals. Interestingly, Zoom shared that in addition to the large opportunity to upsell to its large installed base, many of the deals it has won for Contact Center are net new customers, which speaks to the strength of the solution.
Furthermore, with Zoom Phone and Zoom Contact Center along with other products, the company is seeing greater success in moving upmarket. Zoom’s enterprise revenue grew 5% YoY in FY Q1’25 (total revenue was up 3% YoY), and represented 58% of revenue. Zoom reported 8% YoY growth in the up-market with 3,883 customers contributing more than $100,000 in trailing twelve months revenue. Key reasons for its enterprise traction include expanding routes to market and go-to-market motions. Zoom has made greater investments in its partner program that includes a good mix of resellers, SIs, GSIs, as well as strategic partnerships such as AWS and Avaya, among others.
Ongoing Momentum for Zoom Spaces
Zoom has consolidated its Spaces portfolio to expand from Zoom Rooms into adjacencies like Workplace Reservation, Visitor Management, and Digital Signage. In its FY Q1 25 earnings, Zoom announced that it has reached 2 million in cumulative number of Zoom Rooms licenses purchased. Though it is unclear exactly how many of these rooms licenses are provisioned and active, it’s a reflection of Zoom’s continued growth in video-enabling more meeting rooms for hybrid work. In the last year, Zoom has also provisioned over 100,000 desks in Workspace Reservations to support in-office work.
Zoom’s workspace reservation and management software was one of the first to become available in the market, capitalizing on the growing market need for workspace optimization in the flexible and hybrid work era. This has been a market differentiator in the Zoom portfolio, given the much-delayed launch of Microsoft Places. Interestingly, there was no mention of Zoom Huddles (previously Zoom Spots) at Perspectives. Launched last year, Huddles is a virtual co-working space designed to bring in-office, ad-hoc engagement experiences to virtual employees.
Conclusion
Looking at Zoom’s trajectory over the last several months, it is clear that the company has made many bold moves. While the evolution is critical for its long-term growth, it also demonstrates Zoom’s agility in a highly competitive and mature communications and collaboration market.
Zoom is fully committed to lead with an AI-first strategy while maintaining its core differentiators of robust feature sets, simplicity, and affordability. Zoom’s current portfolio is wide and deep and very differentiated. The company should continue to amplify its messaging to change the deeply rooted market perception that it is mostly a video meetings provider. More importantly, Zoom must build on its growing successes in Contact Center and Phone while ensuring that it fully capitalizes on opportunities where its portfolio gives it a competitive edge–Workvivo, Zoom Docs, Workspace Reservation, and Zoom Events included.
