Despite falling revenue from online sign-ups, videoconferencing company Zoom remains positive about its future outlook, posting a 5% year-on-year increase in total revenue for the three months to April 30.
The company saw unprecedented levels of growth during the COVID-19 pandemic but since the end of global lockdown orders has sought to pivot to connect workers both inside and outside the office to stabilize its long-term growth.
Reporting results for the first quarter of its 2024 fiscal year, Zoom said revenue from enterprise customers—those engaged with its direct sales team or partners—represented the biggest growth area, up 13% year on year and accounting for 57% of the total revenue. The number of enterprise customers grew 9% year on year to approximately 215,900.
“Online” revenue, from customers who subscribe to its Pro or Business plans through its website, fell 8% to $473.4 million for the quarter ended April 30.
The tide of departing customers is slowing: Zoom reported online average monthly churn of 3.1%, down from 3.4% in the preceding quarter and 3.6% a year earlier.
In February 2023, that decline prompted Zoom to lay off around 1,300 employees, approximately 15% of its global workforce.
“We did experience some distraction across the global sales team due to the previously announced headcount reduction and subsequent sales reorganization,” Zoom’s CFO Kelly Steckelberg told analysts on a call
“The decline in EMEA was primarily attributable to the outsized impact of the headcount reduction due to local regulations prolonging the process, the Russia-Ukraine war, and the stronger dollar. The decline in APAC was primarily attributable to the stronger dollar,” Steckelberg said.
During Zoom’s fourth quarter of 2023 earnings call, CEO Eric Yuan told analysts that that the company would be looking into ways it could benefit its customers by deploying artificial intelligence. Earlier this month, Zoom announced a partnership with AI startup Anthropic to bring AI features into its products, starting with its Contact Center product line.
As a consequence of the pivot to AI, Zoom’s research and development expenses grew by 25% year on year to approximately $106 million, with Steckelberg directly attributing this increase to the company’s investments in technology such as AI.
“Looking ahead, innovation will remain a top priority for Zoom,” she said.