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How to pitch investors on Zoom

As Steve Barsh, Managing Partner of Dreamit Ventures, once said:

You only have a few minutes to catch an investor’s attention.

Businesses everywhere have been impacted by the 2020 global pandemic, and in the time of COVID-19, the concept of funding is daunting for many founders. With social distancing and quarantines in effect around the globe, social norms have been completely disrupted.

However, just because in-person contact isn’t allowed doesn’t mean that pitching to investors is an impossible feat. Conversely, pitches have now moved in the direction almost everything goes in our digital age–online. Enter: the video pitch.

Navigating a new fundraising landscape

When a company seeks funding, founders typically travel to areas that have a high number of investors, such as Sand Hill Road . Founders will often spend days in these investor-dense areas, jumping from one boardroom meeting to the next. The goal is to set up as many face-to-face meetings as possible with interested parties in order to raise money.

COVID-19 has sparked a potential turning point in the fundraising landscape, however, by further propelling the concept of video meetings. Most of these meetings are held via Zoom, a video conferencing app aimed towards businesses. The app reached a valuation of $1 billion by January 2017 and climbed to $16 billion by April 2019 , but 2020 put Zoom on the map. While employees around the globe have been confined to their homes, Zoom has been a way for companies to stay connected.  ‍

Related : The COVID-19 guide to moving your event online ‍

Previously, popular belief was that video pitches were fragmented and awkward–but that belief is changing, thanks to investors and seed money startup accelerators such as Y Combinator.

Since 2005, Y Combinator has funded over 2,000 startups and is now a community of over 4,000 founders. Their companies have a combined valuation of over $100B and include names like Airbnb, Stripe, Dropbox, GitLab and DoorDash.

While more than 25 of their companies directly respond to the COVID-19 crisis by dedicating resources to find treatments and vaccinations, Y Combinator has simultaneously focused its attention on new startups that need to raise capital during this time.

Not to be stopped by a global pandemic, YC moved their famous Demo Day online: transitioning a multi-stage event of 200 companies vying for the attention of over 500 investors to a gallery of single-slide decks online–only weeks before the event.

As a company whose aim is to help startups succeed even amidst turbulent times, it’s only fitting that we spoke to YC partners about pitching via Zoom. So if you are aiming to make big moves even while quarantined at home, here’s what you should know.

Advice from the YC community — How to pitch investors over Zoom

Advice from yuri sagalov, former yc part-time partner.

Yuri Sagalov is a founder, entrepreneur, advisor, and angel investor. When asked his thoughts on pitching to investors over Zoom, he gave the following advice:  ‍

(Note: This advice not only applies to those pitching to investors, but also those who aim to do sales over video now and into the future.) 

• Get a good webcam . A good camera is imperative. Although it may be challenging to source a good webcam at this time ( many are sold out ), you can also use an old DSLR camera with clean (devoid of onscreen data indicators) HDMI outputs, which will often result in a better quality picture. However, you’ll need an adapter that converts the HDMI output to a webcam input, such as the Elgato Camlink or the Elgato HD60 S+ . Check to see if your current camera is supported here .
• Additional tip : A good camera will help make up for bad lighting a little , but it’s important that you have plenty of natural light available .
• Don’t forget about your microphone . Your pitch needs to be clear and concise, which is why a good microphone is so important. Always complete a sound check prior to any pitch. In addition, do not rely on your laptop microphone–it will pick up on background noise, including the sound of you typing notes. If you’re using AirPods, make sure they don’t die during your call and/or or have a backup handy.
• Look professional . You may be quarantined, but that does not mean you should not remain mindful of your appearance. While a button-down shirt or blouse is not necessarily required, first impressions are always relevant.
• Additional tip : Consider getting a cheap greenscreen . This small investment can make you look a lot sharper.
• Plan a backup internet connection . When everyone is online, the internet can be unreliable–Yuri’s Comcast connection has cut out numerous times. Tethering is fine, but you’ll need to be ready to switch over on short notice. (Yuri has been able to switch to tethering off his phone in under 30 seconds.) When using Zoom, you won’t need to restart the conversation–you’ll automatically reconnect.
• Try to build in breaks . Pitching over video is harder because figuring out the conversation cadence without in-person cues is difficult. If you plan for breaks in your pitch, this will provide an opportunity for the investor and/or person to whom you’re selling to ask questions.
• Be mindful of your tone . Your voice tone matters much more because you’ve lost most of your body language, especially when you are screen sharing slides. You have to rely on your voice to punctuate key points, so make sure you’re not speaking in a monotone voice. Use intonation to help cue your audience as to what is TRULY important–just as I’m doing with capital letters in this sentence.
• Keep your pitch short . It is easy for people to get distracted, start browsing the web and doing other things if you’re just droning on. As a result, your pitch has to be that much more engaging and conversational–keep it short, sweet, and ask questions throughout.

Advice from Dalton Caldwell, YC Partner

Dalton Caldwell is an entrepreneur and technologist, as well as a YC partner. After listening to hundreds of video call pitches, here’s what he had to say:

• Read your audience . Dalton explained that the single greatest mistake he has seen in video meetings with founders is their lack of insight in regards to an investor’s engagement level. If you are unable to tell when an investor is engaged and interested in what you have to say, you will miss the mark.
• Try to keep your nerves under control . Unfortunately, being nervous can worsen your ability to connect with the investor(s) you’re pitching to, so be sure to rehearse. You will likely ramble if you’re nervous, which can bore and frustrate those you’re pitching to.
• Keep the investor engaged . Whether you are pitching over video or not, the investor will be saying just as much as you in a good meeting. Your goal is therefore to keep the investor engaged. Dalton suggests that after every major point, pause and ask whether or not your point makes sense. To do so, be prepared with a list of questions that you can ask in order to break up the conversation. After all, the last thing you want is for your pitch to sound like an online lecture.

Meeting investors and pitching in front of a camera instead of a person is not an easy transition. But although pitching on Zoom and other video conferencing platforms poses its own set of unique challenges, there are also a lot of advantages. This is your opportunity to invite an investor into your space, so embrace the intimacy and use video meetings to your advantage.

Above all, make sure you’re prepared–not just in terms of your verbal pitch, but your overall presentation. Remember, investors see thousands of presentations a year. If you are going to stand out while pitching on Zoom, you’ll need a pitch deck that stands out.

‍ Ready to get started? Design your winning pitch deck today !

• Originally published on June 3, 2020

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Investor Days: Why and How to Organize a Virtual Investor Day

• October 6, 2020

This week we take a look at virtual investor days. This topic has become increasingly important as companies switch to holding virtual conferences instead of traditional investor days, due to the Covid-19 pandemic, a trend that we suspect will continue even post COVID due to convenience and lower cost. Here we outline the pros and cons of a virtual investor day, best practices and recommendations, the main structure that these events follow, and a few recent examples that have been held by different companies. Miranda-IR is happy and keen to organize your virtual Investor from beginning to end.

Pros and cons

In short, a virtual investor day (versus a traditional one) is cheaper, easier to set-up, simpler to promote (to increase reach), can be recorded for further review, and has greater tech capabilities for the Q&A sessions as well as increased control. As with everything, it’s not perfect, and some of its drawbacks include more distractions as investors multitask during the event, no personal interaction, less spontaneity, and less control on participants (risk of media and competitors entering).

Best practices/recommendations

If you are looking to plan a virtual event, there are a few things to keep in mind. Here at Miranda IR, we recommend the following:

• Prepare. Although virtual events are easier to organize, those presenting still need to prepare at the same level, as with a more active Q&A, preparation and readiness is key.
• Share your brand. Take advantage of the event’s registration process to advertise your business. Moog held an event on August 6 th , and provided pre registered investors and analysts with supplemental information that could help during the event (through email).
• Stay on topic. Address what investors want to hear about, but that isn’t mentioned often enough (e.g. not mentioned on quarterly earnings calls). Some topics could include ESG, digital – how is the business transforming? What stage is it at in its digitization journey?
• Maintain your corporate image. Have a consistent background for all speakers, preferably with the company logo. Make sure it works well with your company’s message and make sure it does not detract from the presentation on the screen at the same time.
• Rehearse. Take advantage of planning time to rehearse for optimal lighting, stable connections, camera angles and clear audio.
• We recommend Tuesday to Thursday, either early (8am to 10am) or afternoon (3pm to 5pm).
• Manage the invite list carefully, and usually do not accept those who are clearly not investors nor analysts. One access per confirmed investor/ analyst.

Main structure

Virtual investor days are following similar schedules, and have been successful through the use of platforms like ON24, Vbrick, ChorusCall, Zoom, MagYates, Hopin, etc. Here is an outline of the main structure your virtual event should follow:

The first point of contact is through email, through the use of the company’s distribution list. This email should include relevant information on the virtual investor day (date, time, duration, links, etc.), as well as the link to form to pre-register and contact details in case questions arise. After registering, participants receive a confirmation email providing the link and telephone numbers (for dial-ins) for the virtual event. On the day of the event, a reminder should be sent to the participants one hour prior to the webcast, providing all the information needed to access and follow the transmission.

Five minutes before the webcast is about to start, participants enter their login credentials used to fill the registration form. The event has an operator that presents the company and speakers, periodically reminds participants about asking questions, moderates the Q&A session and announces breaks (which are highly recommended). It is important to use platforms that allow you to watch the live event and at the same time displays the investor day presentation. It’s also a good idea to prepare promotional videos presenting the company’s products, lines of business and initiatives. The investor day concludes with a Q&A session, with questions from both dial-in participants as well as questions posted on the webcast’s chat section.

There are several platforms with different pricing depending on the number of people connecting to the call (dial-in), the number of participants for the webcast, the number of webcasts that will occur (relevant if executives are at different locations), the inclusion of break-out rooms (separate Q&A sessions), etc. According to Miranda IR research, a highly professional virtual event with 100 participants, 8 speakers, and a duration of three hours, would cost an estimated $4,000 – $8,000 USD depending on the factors mentioned above. (It can be done much, much cheaper with ZOOM webinars, but you lose a fair amount of quality doing a webinar-type Investor Day).

Here is a partial list of some recent virtual investor day examples as well as relevant information for each:

Pfizer Investor Day 2020

Platform: V Brick

Date: September 14th, 2020

Duration: 3:00

Materials included: Webcast and presentations on Pfizer Overview, on Internal Medicine and on Vaccines, Transcript post-event.

Link:  https://investors.pfizer.com/events-and-presentations/event-details/2020/Pfizer-Investor-Day-2020/default.aspx

Sanofi Virtual R&D Day Investor Event

Platform: Unknown (appears to be Webex)

Date: June 23 rd , 2020

Duration: 2:30

Materials included: Webcast and presentation on R&D

Link:  https://www.sanofi.com/en/investors/financial-results-and-events/investor-presentations/2020-rd-presentation

Credicorp Investor Day

Platform: ChorusCall

Date: October 1 st , 2020

Duration: 2:49

Materials included: Webcast and presentation

Link:  https://services.choruscall.com/links/bap201001.html

Vistra Investor Day 2020

Platform: ON24 (by Q4)

Date: September 29 th , 2020

Duration: 1:55

Materials included: Webcast, Presentation and Press Release

Link:  https://investor.vistracorp.com/investor-relations/events-and-presentations/event-details/2020/Vistra-2020-Virtual-Analyst-Day/default.aspx

Zoomtopia Zoom Analyst Day

Platform: Zoom

Date: October 15 th , 2019

Duration: 2:15

Materials included: Webcast and corporate videos

Link:  https://www.youtube.com/watch?v=9-jVyOyPptM&feature=youtu.be

According to IR Magazine research, in August the number of companies announcing investor or analyst days increased to its highest level since March, following a significant drop-off due to the Covid-19 pandemic; however with 30 announcements in August this year versus 42 last year, the numbers are still relatively low, making this a good time to plan your virtual investor. Miranda IR is here to help and is happy to organize your virtual investor day. 

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Rewriting the Investor Day Playbook: Tips for Executing a Successful Virtual Event

Two investor day experts combine experience to deliver best practices on leveraging digital platforms to deliver a compelling virtual investor day

The investor day is one of the most effective platforms for presenting your company’s strategy, outlining your long-term targets and showcasing the depth and strength of your management team. with the world moving to virtual formats for the foreseeable future, iros are faced with a new task – mastering virtual investor day planning. this pivot presents new challenges as well as exciting new opportunities to engage and communicate critical messages with the investment community., the following are top tips for iros to master to execute a successful virtual investor day:, 1. follow the fundamental rules of executing a successful investor day – which remain the same.

While there are many things that are different, the fundamental building blocks of investor day planning remain intact, whether executing an event in person or virtually.  These include:

• Start with an understanding of market perceptions – A critical first step for investor day planning is to understand what investors want to know about your company and what would compel them to increase or initiate a position in your stock. To do so, it can be helpful to engage with a third-party to conduct a perception study and leverage the findings as a roadmap to develop your agenda, messaging and slides.
• Identify a few key messages for the day – Typically this will be three to four key messages that you want the audience to be sure to understand when they leave the meeting. A helpful practice is to consider what you want analyst report headlines to reflect the day after your event. You will want to get executive buy-in on the key points you identify and then build your investor day program around these.
• Build effective presentations – To create compelling presentations that strike a balance between simplicity and meaningful content, David Fine advises to follow his four best practices in presentation development: 1) have clear messages, 2) use a structured flow that tells a story, 3) create simple slides with a clear takeaway in the title and 4) leverage strong and meaningful design.
• Provide multi-year outlook – Investors want to walk away from an investor day with a view of your company’s financial potential over time, and as the world normalizes, will expect some longer-term guidance of key metrics. With the uncertainty and fluidity of COVID-19 affecting visibility for most companies, providing mid- or long-term financial targets becomes more challenging than usual. This should be a high-priority topic to address with management at the start of the planning process to vet out what metrics, ranges, assumptions or scenarios your company can reasonably provide in the current environment.

2. Drive audience engagement

The need to engage a virtual, and easily distracted audience, is one of the biggest differences to consider as you plan your investor day. To keep your audience engaged, consider the following strategies:

• Shorten the event – Best practice is to keep your virtual event to approximately two and a half hours compared with the typical four to five hours for in-person investor days.
• Incorporate video of your speakers – Video versus an audio-only webcast can make a major difference in engaging your virtual audience.
• Ensure clear, content-dense presentations – The shorter event timeframe puts an even greater emphasis on creating compelling and concise presentations that get to the heart of the issues investors want to better understand.
• Prioritize Q&A – Ideally 30% to 40% of the event time should be dedicated to Q&A to break up the presentations and engage your audience.
• Leverage digital assets to make your story come alive – For example, include customer testimonial videos, product demos, virtual tours or advance screenings of new promotional videos.
• Incorporate interactive sessions – Fireside chats or panel discussions with customers, industry experts or leaders within your organization can be highly engaging and an excellent way to validate your company’s market position or strategy.

3. Prioritize planning

As we know from planning traditional investor days, there are many logistics to consider with an investor day, and virtual events are no different. Instead of things like catering, presentation printing and room reservations, you will need to manage digital-world logistics like platform technical specifications, Q&A logistics and speaker Internet and video capabilities.

• Select a strong technology partner. With a virtual event it is imperative that you vet your technology partner(s) thoroughly to make sure they can support your event goals and the interactive features that support your message. This means understanding the webcast platform’s capabilities, limitations and deadlines for functions such as video-based speaker presentations, integrating pre-recorded content, streaming product/demo videos, streaming live multi-speaker panels, and hosting live Q&A. Before signing with a platform, request references from other IROs who have used the service for an investor day to verify the platform’s reliability and leverage learnings from technical hurdles they may have encountered.When you can, pre-record. To minimize risk of technical issues, pre-record as much as possible. That goes for the speaker’s prepared remarks, customer panels, virtual tours and product demos.Think through how you will handle Q&A. How you handle Q&A is probably one of the most important logistical decisions you’ll need to make. You will need to make sure the Q&A sessions are well planned and tightly choreographed. Some questions to consider are:
• How will you take questions? There are several approaches to consider with pros and cons to each. For example, the IRO can announce questions submitted from analysts and investors through email or the chat function, or you can open up the line for analysts and investors to ask questions. Another option is to have a panel of analysts on video ask questions of the speakers.  You also can use a platform like Slido, where the audience can submit questions and then vote on which should be posed.
• How will your team answer questions? Will you have a panel of speakers available by audio or video? Which speakers will participate in each Q&A segment?
• Who will moderate the Q&A? This may be the IRO or it could be an operator, depending on the approach to Q&A you select.
• Will you give attribution? If you choose to ask questions that are submitted via chat or email, you will need to decide if you identify who asked the question.

4. Prepare your speakers for the virtual stage

In delivering a presentation, there’s an inherent difference between communicating face-to-face and through a video platform. With a virtual presentation, you will need to consider speaker delivery and each speaker’s setting. Here are a few pointers to keep in mind:

• Leverage the power of voice – Since the use of a small computer screen limits your ability to fully leverage the power of body language, your voice becomes that much more important. That means that each speakers’ enthusiasm for the company needs to come across in the tone and tenor of their voice. It is important to speak loudly, clearly and most importantly, use vocal variety. Adjusting the tone and cadence throughout the presentation makes the delivery more interesting, keeps people’s attention and emphasizes key messages.
• Use gestures with caution – Gesturing also can be effective in bringing more energy to the screen, but speakers will need to be aware how their gestures come across the webcam so that they don’t, for example, have a giant hand coming at the audience.
• Eye contact is critical – To make sure speakers are making eye contact with the audience, they will need to be set up to focus on the webcam or laptop camera, not their script or second screen. Putting the script on the same screen as your webcam works well, as does placing a second monitor directly behind the webcam.
• Professionalism matters – If you’re using video, definitely consider using a professional production team. And if not, invest in high-def cameras and good mics for all of your speakers to enhance the production quality for each of your speakers.
• Think wardrobe – While dress codes are decidedly less formal in this new virtual world, it’s still important to look professional and reflect the image you want to convey about your company and its culture.
• Note backgrounds as they will be judged – In today’s virtual world, a backdrop is worth a thousand words. Each speaker’s background should convey the right image for your company. You may, for example, consider having each speaker against a similar, simple background or it may align better with your culture to have each speaker in their unique setting. With more complex backgrounds, think about the details as they will be noted. If there’s a bookshelf behind the speaker, for example, what books can the audience see, and what do they say about the speaker.  Also consider using the virtual background function and feature your company logo behind the speakers.
• Room lighting matters – You don’t want your speaker to be either washed out or completely in shadows. Natural light coming from the front and sides of the speaker is best.  When you hold your dress rehearsal, hold it at the same time of day as the actual event so that you can see how natural light presents your speakers.

5. Practice, practice practice…on the platform that you will be using

For any investor day, it is imperative that you rehearse, but even more so with a virtual format that is likely to be a new experience for most presenters. You should hold at least two full rehearsals and at least one of which should be on the platform you are using to ensure you iron out all of the logistics (e.g. transitions between speakers, driving the slides, mock Q&A, etc.). There really is no such thing as being over-rehearsed or “sounding rehearsed.” You just need to rehearse the right way.

While the shift to virtual formats today is out of necessity, experts and investors agree that the virtual event is here to stay as a go-to-resource for IROs. Not only are virtual formats more convenient for investors (no travel required), but they can be considerably more cost effective for companies, allow for engagement with an unlimited audience size and, when done right, can more effectively deliver on your goals. For this reason, IROs can leverage learnings from their virtual investor day to build high-touch virtual interactions into your IR program going forward.

Fine Communications Inc. is a boutique communications firm specializing in investor presentations. For more information contact David Fine at [email protected].

Sharon Merrill  is a strategic advisory firm that counsels IROs on virtual investor day planning; effective presentation development; and virtual meeting presentation coaching.  Contact us  to discuss how we can help.

Sharon Merrill and Fine Communications recently joined Mark Grant, Vice President, Investor Relations, GoDaddy Inc. on a NIRI-hosted webinar to discuss practical advice for hosting a compelling virtual investor day. To view the replay, click here .

David Calusdian

David is an accomplished communicator with more than 30 years of experience in advising and coaching CEOs, CFOs, IROs, and boards of directors through a range of critical communications events, including IPOs, quarterly earnings results, executive transitions, and M&A. David is an acknowledged authority on executive presentation coaching, investor relations strategy, investor day execution, and strategic messaging.

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Zoom Reports Financial Results for the Third Quarter of Fiscal Year 2022

November 22, 2021 16:05 ET | Source: Zoom Video Communications, Inc. Zoom Video Communications, Inc.

• Third quarter total revenue of $1,050.8 million, up 35% year over year
• Number of customers contributing more than $100,000 in TTM revenue up 94% year over year
• Third quarter GAAP operating margin of 27.7% and non-GAAP operating margin of 39.1%

SAN JOSE, Calif., Nov. 22, 2021 (GLOBE NEWSWIRE) -- Zoom Video Communications, Inc. (NASDAQ: ZM) today announced financial results for the third fiscal quarter ended October 31, 2021.

“In Q3, we held our premier user event, Zoomtopia, on our Zoom Events service. During this immersive, multi-track conference, we showcased how Zoom is placing people at the center of our communications platform, connecting their disparate work streams into our technology, moving beyond enterprises’ ability to collaborate internally, and empowering them to communicate face-to-face with their customers through Zoom Events and our upcoming Video Engagement Center. We also showcased innovations such as hot desking, whiteboarding, and smart gallery, all designed to empower both co-located and remote hybrid workforces as some companies test return to office programs,” said Zoom founder and CEO, Eric S. Yuan. “Through innovation and dedication, we will continue to deliver happiness to our customers. Looking forward, we expect to close the year between $4.079 to $4.081 billion in total revenue, representing approximately 54% year-over-year growth, alongside strong profitability and operating cash flow growth. We are well on our way to becoming an indispensable platform for enterprises, individuals, and developers to connect, collaborate, and build in the flexible hybrid world of work. We believe our global brand, innovative technologies, and large customer base position us well for the future.”

Third Quarter Fiscal Year 2022 Financial Highlights:

• Revenue: Total revenue for the third quarter was $1,050.8 million, up 35% year over year.
• Income from Operations and Operating Margin: GAAP income from operations for the third quarter was $290.9 million, up from $192.2 million in the third quarter of fiscal year 2021. After adjusting for stock-based compensation expense and related payroll taxes, and acquisition-related expenses, non-GAAP income from operations for the third quarter was $411.3 million, up from $290.8 million in the third quarter of fiscal year 2021. For the third quarter, GAAP operating margin was 27.7% and non-GAAP operating margin was 39.1%.
• Net Income and Diluted Net Income Per Share: GAAP net income attributable to common stockholders for the third quarter was $340.3 million, or $1.11 per share, up from $198.4 million, or $0.66 per share in the third quarter of fiscal year 2021. Non-GAAP net income for the third quarter was $338.4 million, after adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, gains on strategic investments, net, and undistributed earnings attributable to participating securities. Non-GAAP net income per share was $1.11. In the third quarter of fiscal year 2021, non-GAAP net income was $297.2 million, or $0.99 per share.
• Cash and Marketable Securities: Total cash, cash equivalents, and marketable securities, excluding restricted cash, as of October 31, 2021 was $5.4 billion.
• Cash Flow: Net cash provided by operating activities was $394.6 million for the third quarter, compared to $411.5 million in the third quarter of fiscal year 2021. Free cash flow, which is net cash provided by operating activities less purchases of property and equipment, was $374.8 million, compared to $388.2 million in the third quarter of fiscal year 2021.

Customer Metrics:  Drivers of total revenue included acquiring new customers and expanding across existing customers. At the end of the third quarter of fiscal year 2022, Zoom had:

• 2,507 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 94% from the same quarter last fiscal year.
• Approximately 512,100 customers with more than 10 employees, up approximately 18% from the same quarter last fiscal year.
• A trailing 12-month net dollar expansion rate in customers with more than 10 employees above 130% for the 14th consecutive quarter.

Financial Outlook:  Zoom is providing the following guidance for its fourth quarter fiscal year 2022 and its full fiscal year 2022.

• Fourth Quarter Fiscal Year 2022: Total revenue is expected to be between $1.051 billion and $1.053 billion and non-GAAP income from operations is expected to be between $361.0 million and $363.0 million. Non-GAAP diluted EPS is expected to be between $1.06 and $1.07 with approximately 307 million non-GAAP weighted average shares outstanding.
• Full Fiscal Year 2022: Total revenue is expected to be between $4.079 billion and $4.081 billion. Non-GAAP income from operations is expected to be between $1.598 billion and $1.600 billion. Non-GAAP diluted EPS is expected to be between $4.84 and $4.85 with approximately 306 million non-GAAP weighted average shares outstanding.

Additional information on Zoom's reported results, including a reconciliation of the non-GAAP results to their most comparable GAAP measures, is included in the financial tables below. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future, although it is important to note that these factors could be material to Zoom's results computed in accordance with GAAP.

A supplemental financial presentation and other information can be accessed through Zoom’s investor relations website at investors.zoom.us.

Zoom Video Earnings Call

Zoom will host a Zoom Video Webinar for investors on November 22, 2021 at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss the company’s financial results, outlook and business highlights. Investors are invited to join the Zoom Video Webinar by visiting: https://investors.zoom.us/

Zoom is for you. We help you express ideas, connect to others, and build toward a future limited only by your imagination. Our frictionless communications platform is the only one that started with video as its foundation, and we have set the standard for innovation ever since. That is why we are an intuitive, scalable, and secure choice for large enterprises, small businesses, and individuals alike. Founded in 2011, Zoom is publicly traded (NASDAQ:ZM) and headquartered in San Jose, California. Visit zoom.com and follow @zoom .

Forward-Looking Statements This press release contains express and implied “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial outlook for the fourth quarter of fiscal year 2022 and full fiscal year 2022, Zoom’s market position, and Zoom’s growth strategy and business aspirations to become an indispensable platform for individuals, enterprises, and developers to connect, collaborate and build in the hybrid world. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “target,” “explore,” “continue,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the statements, including: declines in new customers and hosts, renewals or upgrades, difficulties in evaluating our prospects and future results of operations given our limited operating history, competition from other providers of communications platforms, continued uncertainty regarding the extent and duration of the impact of COVID-19 and the responses of government and private industry thereto, including the potential effect on our user growth rate once the impact of the COVID-19 pandemic tapers, particularly as vaccines become widely available and distributed, and users return to work or school or are otherwise no longer subject to limitations on in-person meetings, as well as the impact of COVID-19 on the overall economic environment, any or all of which will have an impact on demand for remote work solutions for businesses as well as overall distributed, face-to-face interactions and collaboration using Zoom, delays or outages in services from our co-located data centers, and failures in internet infrastructure or interference with broadband access which could cause current or potential users to believe that our systems are unreliable. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” and elsewhere in our most recent filings with the Securities and Exchange Commission (the “SEC”), including our quarterly report on Form 10-Q for the fiscal quarter ended July 31, 2021. Forward-looking statements speak only as of the date the statements are made and are based on information available to Zoom at the time those statements are made and/or management's good faith belief as of that time with respect to future events.  Zoom assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.

Non-GAAP Financial Measures

Zoom has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Zoom uses these non-GAAP financial measures internally in analyzing its financial results and believes that use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Zoom’s financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with Zoom’s condensed consolidated financial statements prepared in accordance with GAAP. A reconciliation of Zoom’s historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

Non-GAAP Income From Operations and Non-GAAP Operating Margins. Zoom defines non-GAAP income from operations as income from operations excluding stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, acquisition-related expenses, and litigation settlements, net. Zoom excludes stock-based compensation expense and expenses related to charitable donation of common stock because they are non-cash in nature and excluding these expenses provides meaningful supplemental information regarding Zoom’s operational performance and allows investors the ability to make more meaningful comparisons between Zoom’s operating results and those of other companies. Zoom excludes the amount of employer payroll taxes related to employee stock plans, which is a cash expense, in order for investors to see the full effect that excluding stock-based compensation expense had on Zoom's operating results. In particular, this expense is dependent on the price of our common stock and other factors that are beyond our control and do not correlate to the operation of the business. Zoom views acquisition-related expenses when applicable, such as amortization of acquired intangible assets, transaction costs, and acquisition-related retention payments that are directly related to business combinations as events that are not necessarily reflective of operational performance during a period. Zoom excludes significant litigation settlements, net of amounts covered by insurance, that we deem not to be in the ordinary course of our business. In particular, Zoom believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses and assist in the comparison with the results of other companies in the industry.

Non-GAAP Net Income and Non-GAAP Net Income Per Share, Basic and Diluted. Zoom defines non-GAAP net income and non-GAAP net income per share, basic and diluted, as GAAP net income attributable to common stockholders and GAAP net income per share attributable to common stockholders, basic and diluted, respectively, adjusted to exclude stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, acquisition-related expenses, litigation settlements, net, gains on strategic investments, net, and undistributed earnings attributable to participating securities. Zoom excludes gains on strategic investments, net because given the size and volatility in the ongoing adjustments to the valuation of our strategic investments, we believe that excluding these gains or losses facilitates a more meaningful evaluation of our operational performance. Zoom excludes undistributed earnings attributable to participating securities because they are considered by management to be outside of Zoom’s core operating results, and excluding them provides investors and management with greater visibility to the underlying performance of Zoom’s business operations, facilitates comparison of its results with other periods and may also facilitate comparison with the results of other companies in the industry.

In order to calculate non-GAAP net income per share, basic and diluted, Zoom uses a non-GAAP weighted-average share count. Zoom defines non-GAAP weighted-average shares used to compute non-GAAP net income per share, basic and diluted, as GAAP weighted average shares used to compute net income per share attributable to common stockholders, basic and diluted, adjusted to reflect the common stock issued in connection with the IPO, including the concurrent private placement, that are outstanding as of the end of the period as if they were outstanding as of the beginning of the period for comparability.

Free Cash Flow. Zoom defines free cash flow as GAAP net cash provided by operating activities less purchases of property and equipment. Zoom considers free cash flow to be a liquidity measure that provides useful information to management and investors regarding net cash provided by operating activities and cash used for investments in property and equipment required to maintain and grow the business.

Customer Metrics

Zoom defines a customer as a separate and distinct buying entity, which can be a single paid host or an organization of any size (including a distinct unit of an organization) that has multiple paid hosts.

Zoom calculates net dollar expansion rate as of a period end by starting with the annual recurring revenue (“ARR”) from all customers with more than 10 employees as of 12 months prior (“Prior Period ARR”). Zoom defines ARR as the annualized revenue run rate of subscription agreements from all customers at a point in time. We then calculate the ARR from these customers as of the current period end (“Current Period ARR”), which includes any upsells, contraction, and attrition. Zoom divides the Current Period ARR by the Prior Period ARR to arrive at the net dollar expansion rate. For the trailing 12 months calculation, Zoom takes an average of the net dollar expansion rate over the trailing 12 months.

Press Relations

Colleen Rodriguez Global Public Relations Lead for Zoom [email protected]

Investor Relations

Tom McCallum Head of Investor Relations for Zoom [email protected]

Zoom Video Communications, Inc. Condensed Consolidated Balance Sheets (In thousands)

Note: The amount of unbilled accounts receivable included within accounts receivable, net on the condensed consolidated balance sheets was $48.6 million and $24.6 million as of October 31, 2021 and January 31, 2021, respectively.

Zoom Video Communications, Inc. Condensed Consolidated Statements of Operations (Unaudited, in thousands, except share and per share amounts)

Zoom Video Communications, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands)

Zoom Video Communications, Inc. Reconciliation of GAAP to Non-GAAP Measures (Unaudited, in thousands, except share and per share amounts)

Related Links

• https://zoom.us/

• Zoom Video Communications-stock
• News for Zoom Video Communications

Zoom Video Communications Reports Financial Results for the Third Quarter of Fiscal Year 2024

• Third quarter total revenue of $1,136.7 million , up 3.2% year over year as reported and 3.5% in constant currency
• Third quarter Enterprise revenue of $660.6 million , up 7.5% year over year
• Third quarter GAAP operating margin of 14.9% and non-GAAP operating margin of 39.3%
• Third quarter operating cash flow of $493.2 million , up 67.0% year over year
• Number of customers contributing more than $100,000 in trailing 12 months revenue up 13.5% year over year

SAN JOSE, Calif., Nov. 20, 2023 (GLOBE NEWSWIRE) -- Zoom Video Communications, Inc. (NASDAQ: ZM), today announced financial results for the third fiscal quarter ended October 31, 2023.

“In Q3, revenue came in ahead of guidance as we bolstered Zoom’s all-in-one intelligent collaboration platform with advanced new capabilities like Zoom AI Companion and continued to evolve our customer and employee engagement solutions. We are also pleased with our Online business where we drove higher retention and saw usage of our new AI capabilities, enhancing the value of our platform,” said Eric S. Yuan, Zoom founder, and CEO. “Our strong performance across a number of metrics has enabled us to increase our full year outlook for revenue and non-GAAP profitability, as well as for free cash flow, which we now expect to be in the range of $1.34 billion to $1.35 billion, up approximately 13% year over year.”

Third Quarter Fiscal Year 2024 Financial Highlights:

• Revenue: Total revenue for the third quarter was $1,136.7 million, up 3.2% year over year. Adjusting for foreign currency impact, revenue in constant currency was $1,140.7 million, up 3.5% year over year. Enterprise revenue was $660.6 million, up 7.5% year over year, and Online revenue was $476.1 million, down 2.4% year over year.
• Income from Operations and Operating Margin: GAAP income from operations for the third quarter was $169.4 million, compared to GAAP income from operations of $66.5 million in the third quarter of fiscal year 2023. After adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, restructuring expenses, and litigation settlements, net, non-GAAP income from operations for the third quarter was $447.1 million, compared to non-GAAP income from operations of $380.9 million in the third quarter of fiscal year 2023. For the third quarter, GAAP operating margin was 14.9% and non-GAAP operating margin was 39.3%.
• Net Income and Diluted Net Income Per Share: GAAP net income attributable to common stockholders for the third quarter was $141.2 million, or $0.45 per share, compared to GAAP net income attributable to common stockholders of $48.4 million, or $0.16 per share in the third quarter of fiscal year 2023. Non-GAAP net income for the third quarter was $401.2 million, after adjusting for stock-based compensation expense and related payroll taxes, losses (gains) on strategic investments, net, acquisition-related expenses, restructuring expenses, litigation settlements, net, undistributed earnings attributable to participating securities, and the tax effects on non-GAAP adjustments. Non-GAAP net income per share was $1.29. In the third quarter of fiscal year 2023, non-GAAP net income was $323.2 million, or $1.07 per share.
• Cash and Marketable Securities: Total cash, cash equivalents, and marketable securities, excluding restricted cash, as of October 31, 2023 was $6.5 billion.
• Cash Flow: Net cash provided by operating activities was $493.2 million for the third quarter, compared to $295.3 million in the third quarter of fiscal year 2023, up 67.0% year over year. Free cash flow, which is net cash provided by operating activities less purchases of property and equipment, was $453.2 million, compared to $272.6 million in the third quarter of fiscal year 2023, up 66.2% year over year.

Customer Metrics:  Drivers of total revenue included acquiring new customers and expanding across existing customers. At the end of the third quarter of fiscal year 2024, Zoom had:

• Approximately 219,700 Enterprise customers, up 5.0% from the same quarter last fiscal year.
• A trailing 12-month net dollar expansion rate for Enterprise customers of 105%.
• 3,731 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 13.5% from the same quarter last fiscal year.
• Online average monthly churn of 3.0% for the third quarter, down 10 bps from the same quarter last fiscal year.
• The percentage of total Online MRR from Online customers with a continual term of service of at least 16 months was 73.2%, up 250 bps year over year.

Financial Outlook: Zoom is providing the following guidance for its fourth quarter of fiscal year 2024 and its full fiscal year 2024.

• Fourth Quarter Fiscal Year 2024: Total revenue is expected to be between $1.125 billion and $1.130 billion and revenue in constant currency is expected to be between $1.129 billion and $1.134 billion. Non-GAAP income from operations is expected to be between $409.0 million and $414.0 million. Non-GAAP diluted EPS is expected to be between $1.13 and $1.15 with approximately 312 million weighted average shares outstanding.
• Full Fiscal Year 2024: Total revenue is expected to be between $4.506 billion and $4.511 billion and revenue in constant currency is expected to be between $4.542 billion and $4.547 billion. Full fiscal year non-GAAP income from operations is expected to be between $1.740 billion and $1.745 billion. Full fiscal year non-GAAP diluted EPS is expected to be between $4.93 and $4.95 with approximately 308 million weighted average shares outstanding.

Additional information on Zoom's reported results, including a reconciliation of the non-GAAP results to their most comparable GAAP measures, is included in the financial tables below. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future, although it is important to note that these factors could be material to Zoom's results computed in accordance with GAAP.

A supplemental financial presentation and other information can be accessed through Zoom’s investor relations website at investors.zoom.us.

Zoom Video Earnings Call

Zoom will host a Zoom Video Webinar for investors on November 20, 2023 at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss the company’s financial results, business highlights and financial outlook. Investors are invited to join the Zoom Video Webinar by visiting: https://investors.zoom.us/

Zoom is an all-in-one intelligent collaboration platform that makes connecting easier, more immersive, and more dynamic for businesses and individuals. Zoom technology puts people at the center, enabling meaningful connections, facilitating modern collaboration, and driving human innovation through solutions like team chat, phone, meetings, omnichannel cloud contact center, smart recordings, whiteboard, and more, in one offering. Founded in 2011, Zoom is publicly traded (NASDAQ:ZM) and headquartered in San Jose, California. Get more info at zoom.com.

Forward-Looking Statements This press release contains express and implied “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding Zoom's financial outlook for the fourth quarter of fiscal year 2024 and full fiscal year 2024, Zoom’s market position, opportunities, and growth strategy, product initiatives, including Zoom AI Companion, and go-to-market motions and the expected benefits resulting from the same, and market trends. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “target,” “explore,” “continue,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the statements, including: declines in new customers and hosts, renewals or upgrades, difficulties in evaluating our prospects and future results of operations given our limited operating history, competition from other providers of communications platforms, other macroeconomic conditions, including inflation and at the current scale of our business, on the overall economic environment, any or all of which will have an impact on demand for remote work solutions for businesses as well as overall distributed, face-to-face interactions and collaboration using Zoom, delays or outages in services from our co-located data centers, failures in internet infrastructure or interference with broadband access which could cause current or potential users to believe that our systems are unreliable, market volatility, and global security concerns and their potential impact on regional and global economies and supply chains. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” and elsewhere in our most recent filings with the Securities and Exchange Commission (the “SEC”), including our quarterly report on Form 10-Q for the fiscal quarter ended July 31, 2023. Forward-looking statements speak only as of the date the statements are made and are based on information available to Zoom at the time those statements are made and/or management's good faith belief as of that time with respect to future events. Zoom assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.

Non-GAAP Financial Measures

Zoom has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Zoom uses these non-GAAP financial measures internally in analyzing its financial results and believes that use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Zoom’s financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with Zoom’s condensed consolidated financial statements prepared in accordance with GAAP. A reconciliation of Zoom’s historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

Non-GAAP Income from Operations and Non-GAAP Operating Margin. Zoom defines non-GAAP income from operations as income from operations excluding stock-based compensation expense and related payroll taxes, acquisition-related expenses, restructuring expenses, and litigation settlements, net. Zoom excludes stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding Zoom’s operational performance and allows investors the ability to make more meaningful comparisons between Zoom’s operating results and those of other companies. Zoom excludes the amount of employer payroll taxes related to employee stock plans, which is a cash expense, in order for investors to see the full effect that excluding stock-based compensation expense had on Zoom's operating results. In particular, this expense is dependent on the price of our common stock and other factors that are beyond our control and do not correlate to the operation of the business. Zoom views acquisition-related expenses when applicable, such as amortization of acquired intangible assets, transaction costs, and acquisition-related retention payments that are directly related to business combinations as events that are not necessarily reflective of operational performance during a period. Restructuring expenses are expenses associated with a formal restructuring plan and may include employee notice period costs and severance payments, and other related expenses. Zoom excludes these restructuring expenses because they are distinct from ongoing operational costs and Zoom does not believe they are reflective of current and expected future business performance and operating results. Zoom excludes significant litigation settlements, net of amounts covered by insurance, that we deem not to be in the ordinary course of our business. In particular, Zoom believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses and assist in the comparison with the results of other companies in the industry.

Non-GAAP Net Income and Non-GAAP Net Income Per Share, Basic and Diluted. Zoom defines non-GAAP net income and non-GAAP net income per share, basic and diluted, as GAAP net income attributable to common stockholders and GAAP net income per share attributable to common stockholders, basic and diluted, respectively, adjusted to exclude stock-based compensation expense and related payroll taxes, acquisition-related expenses, restructuring expenses, gains/losses on strategic investments, net, litigation settlements, net, undistributed earnings attributable to participating securities, and the tax effects of all non-GAAP adjustments. Zoom excludes gains/loses on strategic investments, net because given the size and volatility in the ongoing adjustments to the valuation of our strategic investments. Zoom believes that excluding these gains or losses facilitates a more meaningful evaluation of our operational performance. Zoom excludes undistributed earnings attributable to participating securities because they are considered by management to be outside of Zoom’s core operating results, and excluding them provides investors and management with greater visibility to the underlying performance of Zoom’s business operations, facilitates comparison of its results with other periods and may also facilitate comparison with the results of other companies in the industry.

Free Cash Flow and Free Cash Flow Margin. Zoom defines free cash flow as GAAP net cash provided by operating activities less purchases of property and equipment. Zoom considers free cash flow to be a liquidity measure that provides useful information to management and investors regarding net cash provided by operating activities and cash used for investments in property and equipment required to maintain and grow the business.

Revenue in Constant Currency. Zoom defines revenue in constant currency as GAAP revenue adjusted for revenue reported in currencies other than United States dollars as if they were converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. Zoom provides revenue in constant currency information as a framework for assessing how Zoom's underlying businesses performed period to period, excluding the effects of foreign currency fluctuations.

Customer Metrics

Zoom defines a customer as a separate and distinct buying entity, which can be a single paid user or host or an organization of any size (including a distinct unit of an organization) that has multiple paid hosts. Zoom defines Enterprise customers as distinct business units who have been engaged by either our direct sales team, resellers, or strategic partners. All other customers that subscribe to our services directly through our website are referred to as Online customers.

Zoom calculates net dollar expansion rate as of a period end by starting with the annual recurring revenue (“ARR”) from Enterprise customers as of 12 months prior (“Prior Period ARR”). Zoom defines ARR as the annualized revenue run rate of subscription agreements from all customers at a point in time. Zoom calculates ARR by taking the monthly recurring revenue (“MRR”) and multiplying it by 12. MRR is defined as the recurring revenue run-rate of subscription agreements from all Enterprise customers for the last month of the period, including revenue from monthly subscribers who have not provided any indication that they intend to cancel their subscriptions. Zoom then calculates the ARR from these Enterprise customers as of the current period end (“Current Period ARR”), which includes any upsells, contraction, and attrition. Zoom divides the Current Period ARR by the Prior Period ARR to arrive at the net dollar expansion rate. For the trailing 12 months calculation, Zoom takes an average of the net dollar expansion rate over the trailing 12 months.

Zoom calculates online average monthly churn by starting with the Online customer MRR as of the beginning of the applicable quarter (“Entry MRR”). Zoom defines Entry MRR as the recurring revenue run-rate of subscription agreements from all Online customers except for subscriptions that Zoom recorded as churn in a previous quarter based on the customers' earlier indication to us of their intention to cancel that subscription. Zoom then determines the MRR related to customers who canceled or downgraded their subscription or notified us of that intention during the applicable quarter (“Applicable Quarter MRR Churn”) and divides the Applicable Quarter MRR Churn by the applicable quarter Entry MRR to arrive at the MRR churn rate for Online Customers for the applicable quarter. Zoom then divides that amount by three to calculate the online average monthly churn.

Public Relations

Colleen Rodriguez Head of Global Public Relations [email protected]

Investor Relations

Tom McCallum Head of Investor Relations [email protected]

Note: The amount of unbilled accounts receivable included within accounts receivable, net on the condensed consolidated balance sheets was $132.3 million and $91.6 million as of October 31, 2023 and January 31, 2023, respectively.

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Zoom Video Communications (ZM) Q3 2023 Earnings Call Transcript

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Zoom Video Communications

ZM earnings call for the period ending September 30, 2022.

Image source: The Motley Fool.

Zoom Video Communications   ( ZM 0.17% ) Q3 2023 Earnings Call Nov 21, 2022 , 5:00 p.m. ET

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Kelcey McKinley

Well, hello, everyone, and welcome to Zoom's Q3 FY '23 earnings release webinar. As a reminder, today's webinar is being recorded. And now, I will hand things over to Tom McCallum, head of investor relations. Tom, over to you.

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Tom McCallum -- Head of Investor Relations

Hello, everyone, and welcome to Zoom's earnings video webinar for the third quarter of FY '23. I'm joined today by 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 at investors.zoom.us. Also on this page, you'll be able to find a copy of today's prepared remarks, a slide deck with financial highlights that, along with our earnings press release, include a reconciliation of GAAP to non-GAAP financial results.

During this call, we will make forward-looking statements, including statements regarding our financial outlook for the fourth quarter and full fiscal year 2023; our expectations regarding financial and business trends; impacts from macroeconomic developments and the Russia-Ukraine war; our market position, opportunities, growth strategy, and business aspirations; and product initiatives and the expected benefits of such initiatives. 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, which we discuss in detail in our filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Zoom assumes no obligation to update any forward-looking statements that we may make on today's webinar.

And with that, let me turn the discussion over to Eric.

Eric Yuan -- Founder and Chief Executive Officer

Thank you, Tom. And thank you, everyone, for joining us today. So, last week, we hosted our first fully hybrid Zoomtopia using Zoom Events, and it was great. We unveiled new innovations like Zoom Mail and Calendar, which enable users to frictionlessly navigate across their email, calendar, and other Zoom products, all within the same client.

At Zoomtopia, many of our customers highlighted how they use our expanding platform to do more in the world of flexible work. At our first Partner Connect event, we hosted hundreds of channel partners, who are excited about working with us to drive adoption of the Zoom platform globally. And our developer partners showcased add-on apps that connect interrelated workflows to the Zoom client. As global organizations adapt to how, when, and where work happens, human connection remains paramount.

Zoom is purpose-built to make all kinds of connections possible, effective, and meaningful. We have developed and launched more than 1,500 features and enhancements on the Zoom platform this year, advancing how people connect with each other, their organization, and their customers, ultimately, opening the doors wide for creativity and collaboration. Of course, even as we celebrate our innovations and customers, we still face the backdrop of a challenging macroeconomic environment. We continue to see FX pressure and heightened deal scrutiny for new business but remain focused on delivering happiness to our customers by innovating our platform and expanding our go-to-market capabilities.

Zoom provides a full suite of communications solutions at an attractive total cost of ownership that enables teams to do more with less. And our new products like Zoom Contact Center and Zoom IQ for Sales enable revenue-generation and drive productivity. The continued strength of our enterprise growth is a testament to how the value proposition of our platform resonates with customers even in tougher economic environments. As we enable customers to drive greater efficiency, we also are focusing on our own efficiency.

We have always been judicious with investments, prudent about spending, and we have commanded robust margins since our IPO. So, this is not a major shift for us. We will continue to drive innovation, customer value, and platform expansion, balanced with an increasing emphasis on efficiency and profitability. We continued to see strong traction with customers spending greater than $100,000 in trailing 12 months revenue, which was up 31% year over year.

What's more, these customers are increasingly seeing value in buying the whole platform, with thousands of customers already buying Zoom One packages. From an industry perspective, the largest deals came from tech, media, and financial services. And we also had notable wins in retail, transportation, and pharma. On the tech front, let me first thank Qualtrics, the leader and creator of the experience management category, for expanding their partnership with us.

Qualtrics recently upgraded to Zoom One enterprise, which provides the full power of the Zoom platform to their users and allows them to make meaningful connections with meetings, team chat, whiteboard, phone, and more in one offering. We are delighted to offer Qualtrics a broad set of communications products integrated into one secure and easy-to-use platform. Our enterprise segment comprises not only large publicly traded corporations but also many private companies of all sizes, who see great value in enhancing their Zoom implementations by moving toward our full UC platform. Let me give you a few examples.

First of all, I'd like to thank Vensure Employer Services, a privately owned professional employer organization, for placing their trust in Zoom. In Q3, they added 5,500 Zoom Phone seats and 650 Zoom Contact Center seats, demonstrating the promise they saw in adopting a modern, integrated solution for their teams to interact. Let me also thank Chime Solutions for establishing and already expanding their partnership with Zoom, which includes Zoom One and Zoom Contact Center. Founded with an unwavering focus on bringing jobs and opportunities to underrepresented communities, Chime Solutions delivers high-touch contact center solutions for mid-sized companies and Fortune 500 corporations.

After seeing how well Zoom Contact Center addressed many of their customer's needs and gaining confidence in Zoom's ability to deliver innovation at a rapid pace, they decided to replace their legacy solution with Zoom Contact Center. Executing our innovation roadmap for Contact Center will give us the opportunity to further enhance our partnership with Chime Solutions in the quarters and years to come. I also want to thank G-P, the number one SaaS-based global employment platform, for choosing Zoom Phone to transform their communication systems and support employees across their organization. G-P understood the value of our integrated platform of communication products from their experience using Zoom Meetings, Zoom Webinars, Team Chat, and Zoom Rooms.

G-P ultimately opted for Zoom Phone, as the missing piece in their UC stack, in order to improve their customers' experience, while also enjoying the savings benefits of a cloud-based PBX solution integrated into a full communications platform. Also, I'd like to add that G-P is Zoom's global expansion employment partner and has played a critical role in our growth strategy, giving us the agility and speed to enter new markets quickly. Again, thank you Qualtrics, Vensure, Chime Solutions, and G-P, and all of our customers worldwide. And with that I'll pass it over to Kelly.

Kelly Steckelberg -- Chief Financial Officer

Thank you, Eric. Let me now turn to the quarter's results and guidance. In Q3, total revenue came in at $1.102 billion, up 5% year over year and 7% in constant currency. This result was approximately $2 million above the high end of our quarterly guidance.

The growth in revenue was primarily driven by strength in our enterprise business, which grew 20% year over year and represented 56% of total revenue, up from 49% a year ago. We expect enterprise customers to comprise an increasingly higher percentage of total revenue over time. From a product perspective, we had strong growth in Zoom Phone, coupled with contributions from Zoom Rooms and other products. At investor day earlier this month, we introduced a new metric, online average monthly churn.

In Q3, this metric continued to improve to 3.1%, from 3.7% in Q3 of FY '22 and 3.6% last quarter. We are pleased that this metric has now returned to pre-pandemic levels. The number of enterprise customers grew 14% year over year to approximately 209,300. Our trailing 12-month net dollar expansion rate for enterprise customers in Q3 came in at a healthy 117%.

We saw 31% year-over-year growth in the upmarket as we ended the quarter with 3,286 customers contributing more than $100,000 in trailing 12 months revenue. These customers represented 27% of revenue, up from 22% in Q3 of FY '22. Our Americas revenue grew 11% year over year. EMEA continues to be impacted by the stronger dollar, the Russia-Ukraine war, and online performance, which combined led to a decline of 9% year over year.

APAC, which also impacted by the stronger dollar, declined 3% year over year. Now, turning to profitability. I will focus on our non-GAAP results, which exclude stock-based compensation expense and associated payroll taxes, acquisition-related expenses, net litigation settlements, net gains or losses on strategic investments, undistributed earnings attributable to participating securities, and all associated tax effects. Non-GAAP gross margin in Q3 was 79.5%, an improvement from 76% in Q3 of last year and 78.9% last quarter.

The sequential improvement was mainly due to optimizing usage across the public cloud and our increasing number of co-located data centers. Given this, we expect our full year gross margin to be approximately 79%. Research and development expense grew by 59% year over year to approximately $108 million. As a percentage of total revenue, R&D expense increased to 9.8% from 6.4% in Q3 of last year.

This reflects our ongoing investments in expanding Zoom's product portfolio and delivering on our customers' evolving needs. We expect to exit the year in the range of 10% to 12% of total revenue, consistent with our long-term target. Sales and marketing expense grew by 27% year over year to $301 million. This represented approximately 27.3% of total revenue, up from 22.6% in Q3 of last year.

We continue to invest judiciously in sales capacity and channel partner expansion. G&A expense grew by 6% to $87 million or approximately 7.9% of total revenue, in line with 7.8% in Q3 of last year. Non-GAAP operating income was $381 million, exceeding the high end of our guidance of $330 million, as we continue to thoughtfully prioritize investments. This translates to a 34.6% non-GAAP operating margin for Q3, as compared to 39.1% in Q3 of last year.

Non-GAAP diluted earnings per share in Q3 was $1.07, $0.24 above the high end of our guidance. Due to our share repurchase program, our Q3 weighted average share count has decreased year over year by approximately 4 million shares to 302 million. Turning to the balance sheet. Deferred revenue at the end of the period was $1.4 billion, up 14% year over year from $1.2 billion.

Looking at both our billed and unbilled contracts, our RPO totaled approximately $3.2 billion, up 32% year over year from $2.5 billion. We expect to recognize approximately 59% of the total RPO as revenue over the next 12 months, as compared to 67% in Q3 of last year, reflecting a shift toward longer-term contracts. As a reminder, our annual seasonality of renewals is front-end loaded and moderate over the rest of the year, reflecting the sequentially smaller renewal base. As such, we expect Q4 deferred revenue to grow at approximately 2% to 3% year over year.

We ended the quarter with approximately $5.2 billion in cash, cash equivalents, and marketable securities, excluding restricted cash. Year to date, we have repurchased $991 million of our own stock, representing approximately 11 million shares. We had operating cash flow in the quarter of $295 million, as compared to $395 million in Q3 of last year. Free cash flow was $273 million, as compared to $375 million in Q3 of last year.

Our margins for operating cash flow and free cash flow were 26.8% and 24.7%, respectively. As previously discussed, this year we have seen larger cash outflows from an increase in cash taxes starting in Q2, which relate to the depletion of our NOLs and the lower tax deductions for stock-based compensation caused by the stock price decline. We now expect free cash flow to be at the high end of our range of $1 billion to $1.15 billion. As a reminder, our range assumes that the Section 174 tax legislation requiring capitalization of R&D expenses will be repealed or deferred by Congress by the end of this fiscal year.

Now, turning to guidance. This outlook is consistent with what we are observing in the market today. Specifically, it assumes that our enterprise business will grow in the low- to mid-20s while our online business will decline approximately 8% for the year. For the fourth quarter of FY '23, we expect revenue to be in the range of $1.095 billion to $1.105 billion, which, at the midpoint, would represent approximately 3% year-over-year growth, or 5% in constant currency.

We expect non-GAAP operating income to be in the range of $316 million to $326 million. Our outlook for non-GAAP earnings per share is $0.75 to $0.78 based on approximately 301 million shares outstanding. For the full year of FY '23, we now expect revenue to be in the range of $4.37 billion to $4.38 billion, which, at the midpoint, represents approximately 7% year-over-year growth, or 8.5% in constant currency. This represents a decrease of $15 million from our previous full year guidance, of which approximately $14 million is attributable to the continued FX pressure in Q3 and Q4.

We now expect our non-GAAP operating income to be in the range of $1.49 billion to $1.5 billion, representing a non-GAAP operating margin of approximately 34%. This is an increase of $50 million or 1%, respectively, as compared to our Q2 guidance. Our tax rate is expected to approximate the blended U.S. federal and state rate.

Our outlook for non-GAAP earnings per share is $3.91 to $3.94, based on approximately 304 million shares outstanding. Zoom remains focused on thoughtfully balancing growth and profitability through platform innovation, customer value creation, and partner ecosystem expansion. Thank you to the Zoom team, our customers, our community, and our investors. Kelcey, please queue up our first question.

Will do, Kelly. And as Kelly mentioned, we'll now move into the Q&A session. So, when I call your name, please turn on your video and unmute. And as a reminder, in an effort to allow everyone to ask a question, please limit yourself to one question.

And, of course, our first question is going to come from Meta Marshall with Morgan Stanley.

Meta Marshall -- Morgan Stanley -- Analyst

Great. Thanks so much for the question, and congrats on the quarter. Maybe just sticking with the online business for a second and kind of the stabilization of that business. You know, clearly, you saw the churn statistics improve.

But just wanted to get a sense of how you guys are thinking about stabilization there, how you guys are thinking about just initiatives on new adds, as well as just free-to-pay conversion. Thanks.

Yeah. So, as we shared at analyst day a few weeks ago, you know, we're really happy with the continued improvement in the churn, first of all. And I think it improved even further in Q3. And the fact that now 70% of those courts have moved beyond that 16-month period, in which they really see stabilization, we continue to see that happen.

Wendy and her team are really focused on continuing to look at initiatives for conversion. Those include things like adding local currencies, adding local payment types, as well as looking at packages that make sense. So, all of that is still in process. And, you know, what we're thinking and we have talked about before is we expect online to stabilize from a dollar perspective in Q2 of next year.

And based on our most recent forecast, that is still the case.

Great. Thank you.

Moving on to Mark Murphy with JPMorgan.

Mark Murphy -- JPMorgan Chase and Company -- Analyst

Thank you very much. I'll add my congrats. Very nice free cash flow performance. I wanted to ask you, Eric.

You know, the pace of R&D activity is so rapid at the moment. To what extent do you anticipate that, perhaps, some of the new product innovations -- and I'm thinking of Zoom Mail, Calendar, Zoom Spots, and others, could, perhaps, enhance the stickiness of the usage patterns, right, or drive engagement and collaboration higher in a way that could maybe benefit either your dollar retention rates or maybe some of the premium cloud adoption.

Yeah. So, Mark, that's a great question. That's one reason why we had a very successful Zoomtopia because we announced, you know, so many innovations, almost every innovation. When we look at that how -- what we can do if we use it as a value to the existing paid customer to improve our stickiness, or maybe the potential revenue opportunity, right? Look at our features.

I think we always follow that principle. Look at Email and Calendar. Look at the online paid users, subscribers. And we do not offer for the free users, right? For all those on that, you know, the pro buyers, you know, we give the email calendar for free.

You can use the email calendar full and within the service for -- another, you know, greater service, which is [Inaudible] right? Look at all other features, you know, like Spots. And, you know, all those features certainly can have our enterprise customers, you know, also make ourselves more sticky. Not only do they use Zoom for scheduling meetings, but also can use that, you know, to mimic an office, you know, environment. So, for free users, right, for sure, you know, like a like email calendar [Inaudible] support a client, right? So, for every feature innovation, I think for sure we'll add more value to our customer, either drive stickiness or drive potential revenue opportunity like Zoom IQ, you know, Virtual Agent, and the Contact Center, you know, and the Virtual Agent [Inaudible] and a lot of feature like that.

So, we are very, very excited. And again, you know, and the feedback from customers are very, very positive, you know, and they're very excited about adopting those new features and enhancements.

Thank you, Mark.

Credit Suisse's Fred Lee has the next question.

Fred Lee -- Credit Suisse -- Analyst

All right. Thank you for taking my question. I was wondering if you could talk a little bit about the macro impact on phone adoption and maybe give us an update on Zoom for adoption overall as you have over the past couple of quarters.

Yeah. So, we continue to see strength in Zoom Phone. As a reminder, we announced on the last call that we had crossed over the 4 million seat mark. We also added nine customers in Q3 that have purchased over 10,000 seats.

And that brings us to a total of 64 customers in that category. So, I think it shows continued strength, especially in the upmarket, even in these challenging economic times. So, we're excited about the prospects that we continue to see there. And as we keep promising you, I will break it out when it gets 10% of revenue.

So, you'll be able to see that then a little more clearly.

Yeah. Fred, to add on to what Kelly is saying, you know, more and more customers are increasingly looking at our Zoom, you know, the platform, Zoom One UC platform. It used to be, you look at an important product, Phone or Meetings of Webinar or Team Chat, now, look at a full UC stack because that will give you a better experience. In terms of total ownership of cost, it's also much better.

That's why more and more customers are moving toward our, you know, full Zoom One platform. And I'm very excited about the opportunities there.

Great. Thank you very much.

Now, moving on to Michael Turrin with Wells Fargo.

Michael Turrin -- Wells Fargo Securities -- Analyst

Hey. Thanks. Good afternoon, and appreciate you taking the question. On the front-end loaded renewal seasonality, you had useful tidbit on the deferred revenue growth you're expecting in Q4.

Can you just maybe walk through how you gear up for that as a company, given it's a little bit outside the norm on general calendar cycles that we're used to seeing? What kind of visibility do you have into that cohort currently? And is there anything you can do to shift that profile? Or is it just kind of gradual, this rolls forward, and you've gotten accustomed to it internally thus far? Thank you.

Yeah. So, as a reminder, this occurred, right, due to the significant increase of customers we had during Q1 in the early stages of the pandemic. And what has happened is due to the practice that we have internally of making it easy for our customers, we co-term when they add on additional products or, you know, expand their seat count, for example. So, it's continued to actually exacerbate, if you will, when we're upselling customers, that front-end loaded phenomenon.

So, it will, you know, start to level out over time as we see customers, you know, in Q2 and Q4 being our largest seasonal quarters due to the six month quotas of our upmarket reps. But as you say, we are used to it now internally. Everybody knows this is how it works. We're coming into our third renewal period, and we've seen strength in each of the last two cycles.

So, we're able to accommodate. We know how it works. And it's just something we know that it's not aligned with most of the rest of the industry, which is why we keep reminding you and trying to give you as much color as possible around that.

Appreciate that. Thank you.

And our next question will come from Kash Rangan with Goldman Sachs.

Kash Rangan -- Goldman Sachs -- Analyst

Hello. Thank you very much. Happy Thanksgiving in advance. Good to see you, Eric and Kelly.

I had a question on the enterprise business. I think most of us on the call, we were waiting for the tilt toward the enterprise business. The strength of the enterprise business can offset the weakness in the online business. As we wait for that, I'm curious to get your take on the expansion rate.

I think it came in at 117% or so. And the number of customer, it used to be higher in prior quarters. The number of net new adds to the enterprise still also not quite rebounding and recovering. Can you give us some perspective on how much of this macro versus maybe competition from the likes of Teams, etc.? And, Eric, how does this play out in the, you know, broader adoption thesis for the Zoom platform? When are we likely to see these metrics inflect the other way that could validate your overall thesis that Zoom is not just about video meetings but a broader communication platform? Thank you so much.

Eric, you want to talk about Zoom One first, and then I'll talk about the metrics after that?

Yeah, sure. Absolutely. So, Kash, that's a good question. And, you know, you look at the customer, Qualtrics, right, as they move toward the Zoom One platform, right? So -- and it leverages, you know, our full UC stack, you know, starting from Meetings many years ago.

They added the Phone, you know, the Webinar, Team Chat, and so on and so forth. I think, you know, the problem was that, previously, you know, when it comes to Zoom, everybody probably assumed that this is just video conferencing. And that's not the case. That's why we're doubling down on Zoom One, you know, marketing awareness.

Also talked with the customers [Inaudible] stack. Not only do we offer the best video conferencing service, but also, you know, you look at our other offerings as a full UC stack. And also, we also have Contact Center as well. I think that would take a little bit of time but it's not as [Inaudible].

Zoom, we have a full, you know, the stack, you know, and plus, we also have a very flexible Team Chat. Plus this is free. And it works so well, integrated with other UC solutions. I think customers, you know, are showing great excitement about adopting the full UC powerful.

And more and more customers are moving toward our full UC stack, rather than just the [Inaudible]. And that's why we're very excited because you look at all those offerings, you know, working together similarly. And in terms of total ownership of cost, much better because many enterprise customers are trying to consolidate their full UC stack. You know, UC stack and cloud-based stack is different.

They might use the Gmail or calendar or SharePoint, you know, or the Office, you know, from other vendors. But in terms of UC stack, we want to, you know, deploy the best breed of service. That's why we are going to win on UC stack, plus the, you know, [Inaudible] CC as well.

Got it. Thank you so much, Eric.

And, Kash, just in terms of like your comment about renewals, I want to highlight, especially in the enterprise renewals, remain very, very strong. We were actually slightly ahead of our internal forecasts for Q3. So, we continue to see -- you know, we talked about many metrics, growth, and expansion in the enterprise. It's just, as you say, we're waiting for that stabilization in online to -- because, right now, it's really having, you know, a dampening effect on the overall growth rate of the company.

Thank you, Kelly.

Thank you, Kash.

George Iwanyc with Oppenheimer has the next question.

George Iwanyc -- Oppenheimer and Company -- Analyst

All right. Thank you for taking my question. Eric, maybe with all the enterprise progress just showing, can you give us an update on Contact Center and the adoption that you're seeing there?

Yeah. So, yeah, again, the [Inaudible] new service are very exciting in particular for those customers who will deploy our, you know, the full service with the like of consolidated UC and CC together. And also, we have found interesting use cases [Inaudible], you know, not only to those traditional customer interaction department has started deploying the Zoom Contact Center, but also the internal IT desk as well, right? And again, you know, the Contact Center sales cycle a little bit longer, you know, unlike the Meetings. But however, you know, that showcase, you know, our platform capability and the speed of innovation, customer very excited.

And plus, you look at our own business, right? And we use to deploy, you know, other cloud-based contact center solutions, [Inaudible] our own contact center solutions. Our teams, themselves, are very excited. And a lot of potential pipelines and leads, right, in the pipeline. You know, and also, we are doubling down on that.

And again, the product side of it, we have a high confidence. Go-to-market side, you know, we are gaining tractions, you know, as quickly as possible. Because again, it takes some time, plus also leverage channel and internal go-to-market, you know, the investment. And I think that's a future of big revenue in front of us, especially a customer like the CC and UC together, right, and it's a much better experience, and also the total ownership of cost is also much better.

Moving on to Siti Panigrahi with Mizuho.

Siti Panigrahi -- Mizuho Securities -- Analyst

Thank you. Thanks for taking my question. Just wanted to ask about macro pressure. You talked about last quarter, you know, sales elongation on the enterprise side.

What kind of change you are seeing? You know, anything worsened? And also, how would that impact your pipeline as well?

So, we certainly have seen impact, as I mentioned, from FX. Of the reduced guidance of 15 million, 14 of that is coming from FX pressure. And you saw that, certainly, in our year-over-year growth in Europe and in APAC. In the enterprise, you know, again, renewals stayed strong, excitement about the products.

But as we discussed, it's continued in terms of additional deal scrutiny. I think all of my peer CFOs now are looking at deals, and that's just causing elongation in general. Not that things are losing, we're glad that we're losing deals. They're just taking longer to get done and potentially some of them pushing over quarters.

But, you know, we haven't seen that have impact. It's just taking longer and longer. Not that they're going anywhere else, it's just taking longer to get those done. Now, the good news is, right, especially with all of new products, the consolidation that we offer is a really great value story for our customers in terms of, you know, elimination of additional vendors, getting rid of on-prem servers.

And that continues to be a great story that our customers love.

Thank you, Siti.

SVB Moffett's Sterling Auty has the next question.

Sterling Auty -- MoffettNathanson -- Analyst

Thanks. Hi, guys. Kelly, maybe following up on that, I want to understand the 20% growth in enterprise in the quarter versus the guidance of low- to mid-20% for the full year, does that mean that there's a little bit of a back-end-loaded hockey stick or a bump-up that we'll see next quarter? And, specifically, I think investors are really interested in trying to gauge how should that business react as we move into next fiscal year in light of the concern about layoffs across all industries, and a lot of your Zoom Meetings, etc., are based on per employee per seat pricing.

Yeah. So, we certainly, we've talked about this the last couple of quarters, have seen more and more of our deals shifting to the end of the quarter and taking on that more historically natural cycle that we didn't -- you know, we haven't seen since really early in the pandemic. But that is absolutely the case for us. And we have adjusted our forecast for Q4 for some of that linearity as well.

You know, we have continued to see, as I keep saying, strength in our renewals. And I think that's because while there's concern about layoffs, there's this other phenomena about flexible work, right? Everybody wants to continue to working in the way they become accustomed to. And as long as employers are supporting that in their employees, it really means everybody needs a Zoom license. If you're out of the office even one day a week, you need that Zoom license for Phone, for Meetings, for whatever, Zoom One.

And so, I think that is really compelling reasons for organizations to continue to renew with Zoom.

Understood. Thank you.

Yeah. Thank you, Sterling. You know --

Moving on -- oh, apologies, Eric. Please continue.

Even for those [Inaudible] right, and often deploy the full UC stack. And look at the Team Chat. It's getting more and more popular. And also, the Phone [Inaudible] can use that for their personal use cases as well, right, because it's free.

That's why, you know, a lot of our, you know, tractions for other part of our entire UC platform.

Our next question will come from Michael Funk with Bank of America. Michael, if you'll please start your video for us. All right, Michael. I -- if you can hear us, please go ahead, start your video, and come off mute to ask your question.

All right, hearing no response, we'll go ahead and move on to William Power with Baird. And, William, if you wouldn't mind doing the same thing. Great. Thank you so much.

Will Power -- Robert W. Baird and Company -- Analyst

All right. Thanks for taking the question. Probably for Kelly, a pretty notable increase in stock-based compensation expense. I know you talked about this at the investor day, too, that you expect to get a top-up to be more elevated.

Would be great to just get a little more perspective as to how you're thinking about, you know, that going forward. Is this closer to peak levels? Will it stay at this level? Maybe, over a longer-term time frame, you know, how investors should expect that to turn. And I guess kind of tied to that, you know, you've been aggressive on the stock buyback front. You know, what are the plans there going forward? And how could that tie in to how you think about stock-based compensation?

So, first, we believe that the supplemental grant program is really important for the strategy of the company in terms of retaining our employees and keeping them focused and not having to worry about that. And the supplemental grants vest over the same period as the underlying grant that they're tied to. So, you are going to see this level continue for a few years as those grants are vesting through. And many of them, you know, originally were four-year grants.

So, they have two or three years left in which you're going to see that stock-based comp as those underlying shares are vesting. With the stock, you know, if -- once the stock stabilizes, then you will see less impact for that or less need for additional grants. So, you know, we're hoping that we're at that place and that you're going to not see additional supplemental grants on that same level. But until we get past probably another year's worth, we might have some more.

In terms of the repurchase, as you heard, we purchased 991 million or so dollars or 11 million shares. So, we have a little bit of room with that. And once we've completed that, we'll evaluate whether or not we want to ask the board for authorization. We haven't done that yet.

OK. Thank you.

And we'll now hear from Matt Stotler with William Blair.

Matt Stotler -- William Blair and Company -- Analyst

Hi there. Thank you for taking the question. Maybe just one more on the online business. It'd be great to maybe get some color, some commentary on the economics of that business, the margin profile as a comparison to the enterprise segment of the business and what the implication there is as that revenue mix continues to shift, specifically in the context of the updated long-term figures you gave us a couple weeks ago.

Yeah. So, we've talked about this before. Our online business is a higher-margin business as it's largely, not completely, but largely untouched by any person from a sales organization. There are some online account executives that are there to answer questions.

But it's minimal compared to our enterprise sales organization. So, we certainly took -- we've done a lot of work on modeling what that looks like. And we've taken that into consideration as we laid out our long-term margins that we shared with you at analyst day. As we looked forward for the next several years and how we think the mix could shift between the underlying and the online -- sorry, online and enterprise businesses.

Cool. Thank you.

Moving on to Ryan MacWilliams with Barclays.

Ryan MacWilliams -- Barclays -- Analyst

Thanks so much. To follow up on Matt's question, Kelly -- can you hear me?

Yeah. Oh, there you go. Perfect. You previously noted a potential inflection in the online business early to mid next year.

With churn now right at around pre-pandemic levels, but we're still seeing revenue decline sequentially in this segment, any updates to the potential inflection? And, also, is there any impact from existing Zoom customers upselling to enterprise on this online business segment? Thanks.

So, yes. The answer is yes. There are customers that eventually upsell into enterprise, which is great, right? Because that means they're expanding and they're becoming a bigger customer overall, which we love to see. But that doesn't -- I mean it's not a company term, but it looks like it's moving out of the online business into the enterprise.

And in terms of -- the way we're talking about it is a stabilization of online. And we expect that from a dollar perspective to still happen in Q2 of next year based on our current forecast that we're seeing.

And moving on to Parker Lane with Stifel.

Parker Lane -- Stifel Financial Corp. -- Analyst

Yeah. Thanks for taking the question. Kelly, you referenced thousands of customers that have signed up for Zoom One since it launched, I believe, about five months ago. Can you help me understand the profile of those customers a little bit better? Do the majority of them tend to be existing customers that have been migrated onto Zoom One, new packaging? Or are you seeing a big net new cohort as well? And then, two, is it skewing more enterprise for customers that are thinking about going with Zoom One? Or are you also seeing, you know, a pretty decent spread across all different size organizations? Thanks.

So, Eric, I know you love to talk about Zoom One. Do you want to talk about it for a second? Just so --

Yeah. Sure. Absolutely. I think that, you know -- you know, first of all, I think, Parker, you know, look at our Zoom One.

We launched it several months ago, right? And look at all the customers, you know, medium-sized, enterprise, SMB, they all see the value. You know, that's why we see, you know, in almost every market, you know, they are moving toward the Zoom One package. They do see the value. We do not see any specific market that -- segment, you know, truly standing out from all the way from SMB to enterprise.

And I think that's exactly what we anticipated.

And thank you, Eric. I would just add to that that the key customer wins that we saw in Zoom One in Q3 were a pretty balanced mix of new, as well as customers that are upselling as they're adding new products to their portfolio. So, we're really happy about that, that we're seeing traction in both aspects of the business.

Understood. Thanks again.

And we'll now hear from Shebly Seyrafi with FBN Securities.

Shebly Seyrafi -- FBN Securities -- Analyst

Yes. Thank you very much. So, I'd like to hear from you. What do you think your current visibility is compared to, say, three months ago? I noticed that your RPO grew by 32% year to year, which is impressive.

But you also had a decline in your cRPO percentage over the past several quarters. Your expansion rate has been declining. And with your guidance for deferred revenue growth, 2% to 3%, with my model, I'm getting billings down 10% year to year in Q4. And you've never really had a billings decline in my model.

So, just talk about the visibility you have right now versus three months ago. And when do you think you might see this stabilize? You know, is it a few quarters or in a few years? Thanks.

Yeah. So, the current RPO pressure is largely related to the online customers and the decline that you're seeing in online as the long-term RPO really benefits from the direct and/or the enterprise side of our business, which are, you know, managed by the direct business and have more annual and multiyear contracts. That's kind of why you see that shift in terms of the overall percentage. I would say -- and then the other, you know, impact that we're having that we can't -- which is just difficult to predict, of course, is FX, right? So, you have to consider that, which is more concentrated in online than in enterprise.

But you heard in our guidance that we reduced, we said, about 14 million of that, we believe to be attributable to FX. In general, I would say the economics or the state of our business hasn't changed, meaning our enterprise business and our enterprise sales organization is stable. They're continuing to operate in the same way the online business, with the improvement in churn. As well as the way that the majority of it now has shifted out along the -- beyond the 15 months is really helpful in terms of our ability to forecast that business.

And so, I think the visibility is the same. There's just some different reasons for all those different components that you're talking about. You know, the deferred is -- again, the decline you're seeing in Q4 is really due to the front-end-loaded nature of our business. And then, remember, so the front-end billings -- sorry, the renewals happen at the front of the year, that's where you're going to see the upswing in billings, the upswing in deferred.

And then, that gets amortized over the year, so deferred is coming down. And then, we have much lower renewals in Q4 as well. So, you know, the renewals that are filling up the bucket are much, much smaller. So, it's -- you mentioned very many factors, and there's different reasons for all of those.

Our next question will come from Peter Levine with Evercore.

Peter Levine -- Evercore ISI -- Analyst

Great. Thank you for taking my question. So, I think given some of your customers are pushing back on larger decisions, you know, are you able to kind of toggle your sales force, maybe focus more on those back-to-base opportunities? And then, Kelly, just to follow up, you know, can you share how many of those nine -- I think you said nine 10,000 seat phone customers are net new to Zoom? And then, maybe just share, were these legacy PBX replacements, or are you going into replacing another cloud provider? Thank you.

Yeah. So, first of all, remember, our strategy for selling Zoom Phone to selling into the existing install base. So, I don't know actually the split between those nine, but I'm sure that the majority of those were existing Zoom customers. And I think -- I would say there's a focus on the company that, as Eric just talked about, of expanding not beyond -- not to just Phone, right? But expanding to the full platform.

So, that's really what we have our teams focusing on now. It's Zoom One, it's Contact Center, it's Zoom IQ for Sales. Now, it's Email and Calendar, and really thinking about the complete platform, including Zoom Chat and the adoption within organizations. So, it -- for all the reasons we've been talking about in terms of retention, flexibility for organizations to reduce vendors, the cost savings, the total cost of ownership that they see by having that combined, for all of those reasons, that's really becoming the focus of our enterprise sales organization.

And our next question will come from Matthew Niknam with Deutsche Bank.

Matt Niknam -- Deutsche Bank -- Analyst

Hey, thank you for taking the question. I wanted to ask, you mentioned the greater value that customers are seeking out from the broader platform. I'm just wondering, are there specific areas where you see maybe more room to strengthen the platform? And with the compression we've seen in market valuations, how are you thinking about potential inorganic opportunities? Thanks.

So, Eric, do you want to talk about the platform and the value they see?

Yeah, sure. Absolutely. I think, you know, for those customers, right, who deployed the Zoom One platform, right, they really like it. The reason why we look at one same client, same interface, right, and you have a schedule meeting, you can use our Zoom Team Chat to communicate with your teammates and customers, make a phone call, white board is there.

Now, we're adding a calendar fully integrate together. I think that's the whole value, right? Plus, you look at the customer, they used to be, you know, deploying many other partner solutions. Now, it's one platform, the full UC stack. That's the value.

It's seamless experience. And that's why more and more customers, no matter which other cloud-based solutions they deploy -- take Phone, for example, they deploy other cloud-based phone solutions. Now, they realize the full value of the entire Zoom One platform. We see them more and more.

And the customer, they just, you know, reach out to us rather than we reach out to them to upsell. Now, they reach out to us and say, "Yeah, I see the greater value." And that's why, you know, more and more innovations will be built upon the Zoom One platform. And yeah, like Zoom Spots we recently announced, and that's our focus [Inaudible] our platform, you know, story.

And just in terms of inorganic opportunities --

If you can elaborate on that.

Sure. So, you know, we continue every day to look at opportunities. And, yes, the compression evaluations, certainly, is not lost on us. You know, what we're always trying to balance, of course, is what would it bring to our customers, what would it bring or the impact potentially on our culture.

And then, of course, the value and the state of the technology, right? We have a high bar for both talent and technology here at Zoom. So, it's been difficult, I would say, to date, to find something that really meets all of those standards. Eric is a very hard judge. But that doesn't mean that we're stopping, and we continue to look for opportunities every day.

Yeah. Also, you know, in terms of the full platform, as I mentioned, our customer, the number of things like our experience, they see it, you know, if you look at who are the biggest service provider, you know how to make sure we have a consistent experience. That's not easy. That's why, you know, we tend to look at all of those decorative tech in order to companies like us.

So we you know, we can't many years ago, again, if we wanted to, you know, access the focus on, you know, the brand new service, you know, we might as think about organic, you know, opportunity for now what kind of you see platform we order everything now we just you know focus on the gold marketing, right? And we all have a high confidence we're get to more and more tractions there.

Moving on to Alex Zukin with Wolfe Research.

Alex Zukin -- Wolfe Research -- Analyst

Hey, guys. Just maybe I have one question that -- it's a bit forward, and it's a bit hard. But if I look at, kind of to Shebly's point, the forward-looking metrics and the implicit guide for enterprise revenue next quarter, it's about 15% to maintain the low 20s for the full year. If you go forward a second, it does look like growth next year is going to be kind of in the low to mid single digits, assuming the normalization or stabilization of the online business and assuming some further decel with the macro getting tougher.

With opex growing nearly 30% this year, you know, how are we thinking about a worsening environment? Like, what's the recession playbook for Zoom? We've seen some companies, you know, take some pretty meaningful steps with respect to employees, with respect to dialing up, you know, if you will, the efficiency of the business. What's the plan -- what's the recession plan here? Maybe for both you and Eric.

Yeah. So, I think that your assessment, you know, in terms of -- we're not giving -- let me just make the caveat, first of all, we're not giving out FY '24 guidance on this call. We will do that, obviously, at the Q4 call. But your assessment in the way you're kind of thinking about the top-line growth is right in line with kind of how we're thinking about it right now.

And in terms of then from an operating margin perspective, the way we're thinking about it is, as we're working on our FY '24 plan, we are being very, very thoughtful about prioritization of investments. That's how I would say it. And as you noted, we have grown our expenses, and we've hired a lot this year. And so, being very thoughtful about ensuring that they're focused on the right things, that we are prioritized internally, we are committed to continuing on innovation and meeting our customers' needs, as well as go-to-market expansion.

Those are really the top priorities that we have in making sure that we have resources in the right areas for that, I guess that's what I would say.

Yeah. So, Alex, I think we are much better positioned in regard to, you know, the efficiency and the potential of productivity improvements like cash flow profitability. And the prospect -- as Kelly mentioned, we hire a lot of, you know, teammates, you know, this year. I think they are going to reach a full productivity next year.

You know, that's why I think, yeah, you know, I think we can weather the storm, right, and for any, you know, either short term or long term -- or short or long recession. And, yeah, we feel very confident, you know, to drive efficiency and the productivity.

And I guess maybe just as a follow-up, if I look at the buyback cadence, given -- on the one side, Kelly, if you're talking about, you know, having to issue shares as long as the stock goes down, on the other side, you have $5 billion in cash on the balance sheet to buy back stock. So, how do we -- because I get a lot of questions about, you know, dilution, particularly, given the supplemental share buyback. So, at least on that front, what's the right way to think about over the next year, over the next two or three years, out -- you know, ex-M&A, how you're going to leverage that cash balance?

Yeah. So, you know, we think, based on the share repurchase program that we currently have in place, we've done a good job of being able to offset the dilution from the supplemental shares. We want to be very thoughtful about our cash, though, as we just talked about M&A, for example, and so -- especially as we're focusing on our FY '24 plan, or balancing the opportunity for, you know, managing dilution, as well as earnings on that cash and M&A opportunity. So, all of those are being considered as we look forward for FY '24.

And that's really what we have to say today. We'll have more to talk about when we come back for the Q4 call.

Perfect. Thank you, guys.

We'll now hear from Ryan Koontz with Needham and Company.

Ryan Koontz -- Needham and Company -- Analyst

Thanks for the question. I wonder if you can unpack the strength in enterprise and how to think about that revenue growth across different product categories. If not quantitative, can you kind of give us an idea of where, you know, Phone stacks up versus expanded Meetings license? And any other products look like that could become meaningful, you know, in the next 12 months as you look at that on the enterprise side? Thanks.

Yeah. So, really happy with the progress we've seen with Zoom One, with Zoom Phone, and the strength in Zoom Rooms in Q3. We also certainly see potential in Contact Center and Sales IQ. They're just so early, you know, that from a -- we're seeing progress there and excitement, but it's early stages.

So, in terms of what they're contributing overall to the dollar amount, it's minimal at this point. But we are seeing growth in terms of quarter-over-quarter expansion in those products. So, that's really exciting to see.

Got it. Thanks, Kelly.

And our next question will come from Catharine Trebnick with MKM.

Catharine Trebnick -- MKM Partners -- Analyst

Thank you for taking my question. Appreciate it. One of mine is on your partner program. You brought in a new partner executive last July.

Could you specify any particular areas that he's going to concentrate on to drive more revenue? He just interviewed in one of the CRM magazines. He said he wants to get to 50% revenue through the channel. And can you just address some of the ideas that he has to implement?

So, yeah, Todd -- Catharine's referring to Todd, who joined us, I think, a couple of quarters ago. He's great at Zoomtopia. He hosted our first Partner Connect with over 400 partners were there. So, that was super exciting to see.

And while there are lots of opportunities, I think one of the biggest areas of opportunity is international partner expansion. We've done a good job over the last few years of building master agents and carriers here in the U.S., but it's still relatively nascent outside the U.S. So, that will be a big area of focus for sure.

All right. Thank you.

And, James Fish, with Piper Sandler, please go ahead with your question.

James Fish -- Piper Sandler -- Analyst

Hey, thanks for the question. Most of mine have been asked, but I did actually want to ask on the enterprise sales investment that we've been talking about the last couple of years. But how are you guys looking to balance productivity improvements to support your margin stability versus expanding capacity, especially as these reps who, over the last few years, really had the advantage of, you know, easier sales cycle with Meetings especially? Is there any way to also understand the experience of reps underneath in terms of how much are fully productive at this point? Thanks.

Yeah. So, in terms of our reps, you know, we are constantly looking at opportunities to help make them more productive. And as we were just talking about, we've hired a lot over the last few years. And as we look forward to FY '24, we'll be making many fewer hires.

So, we're really looking for how do we enable the reps, how do we make sure that we have the right overlay teams in the right places to support them? As a reminder, that's -- we have specialists that are selling Contact Center and Phone. And that's a really important aspect of making sure that everybody is aligned on serving our customers in the best way possible. So, that is a big focus. We also have a new president, Greg Tomb, that you all met last quarter.

And he's been spending a lot of time helping us think about that, especially as we're moving up in the enterprise stack. And that's his experience. That's where his background is. And then -- and really focusing on making sure that our comp plans align.

That's another thing that we're taking a look at for FY '24 as well.

James, another critical point just to add on to what Kelly said, and, also, the Zoom IQ for Sales, that product, certainly, everybody could drive our teams' productivity, right, especially with reps that are working remotely, right, how to manage their productivity, drive efficiency, take some you know actions, right, you know, quickly. I think when we deploy the Zoom IQ for Sales by end of this month, literally every rep will be fully trained on Zoom IQ of for Sales. Not only do we have our sales productivity, it also will create a lot of opportunity for us to sell more and more Zoom IQ for Sales. So, that's [Inaudible] for every sales team to drive productivity.

Helpful. Thanks, guys.

Thank you, James.

Moving on to Matt VanVliet with BTIG.

Matt VanVliet -- BTIG -- Analyst

Yeah. Hi. Good afternoon. Thanks for taking the question.

I guess you highlighted Zoom Rooms. And curious how much of that uptick do you feel like has been sort of a return to office for a number of companies and really, you know, having that mixed modality of a conference room and still having remote workers in, and how much, I guess, sort of risk might that come under over the next several quarters of being a growth lever, as we've seen layoffs, as we see, you know, slower macro, and maybe that's, you know, not an additive spend that that companies are going to want to undertake when they're already paying for the individual Zoom licenses. Thanks.

Yeah, I think it's very similar to Zoom Meeting licenses and the aspect of as long as you have a hybrid workforce, you need the right technology in your conference rooms, you know, to ensure that you have this inclusive experience that we've all become so accustomed to. And we continue to listen to our customers. Customers work on innovations to ensure that we provide that. But I don't think it's going to go away.

I mean, we'll see what happens. But I think it's still yet to come to see what happens with like commercial real estate. However, Zoom Rooms and the importance of those in a hybrid workforce, I just -- I can't tell you how important that is. I can't stress enough the importance of that.

And that's really what our customers are seeing as well as they're in some sort of state of a hybrid work environment.

And also, Matt, another thing just quickly. So, it used to be like, look at a conf room, right? Most of the usage are -- use the internet for internal cause. And look at the Zoom Rooms. That's another case.

A lot of customers are leveraging Zoom, right, to cover the customer side of partners, right? That's one difference because that's a reason why our customer like Zoom, right? When you talk with a customer partners, you want to make sure they have the best experience, right, and [Inaudible] those companies who might think about laying off employees and reduce number of the employees. Guess what? Less taxes, but more conf rooms. You know, then all of us, you know, what you can do, right, to double down on our customer and partner [Inaudible] direction. And that's why we still see a great opportunity ahead of us.

And we'll move on to Tyler Radke with Citi.

Tyler Radke -- Citi -- Analyst

Hey, thanks for taking my question. Kelly, In terms of the Q4 guide, I understand that the currency was a bit of a factor there on that lower outlook. But can you just unpack kind of what you're assuming from a macro perspective? You know, is a Q4 guide relative to what was implied last quarter? Is it incorporating, you know, churn getting worse in SMB, or weaker net adds, or maybe you're seeing something on the enterprise side? Just help us understand the non-FX side in terms of what you're expecting for Q4.

Yeah. So, in the online segment of the business, for Q4, we expect churn to be pretty much in line with Q3. I mean, it's likely that number is going to bounce around a little bit quarter to quarter, and that's going to all be visible to you now as we report it. But we're not forecasting any dramatic changes there.

And then, in the online segment, I would say that the -- I mean, sorry, the enterprise segment, I would say the biggest change that we're seeing is just this continued push to deals being at the back end of the quarter. And so, that linearity -- you know, over the last few years, we had a much more balanced linearity in our enterprise segment. And what that leads to, of course, is deals contributing to revenue in the quarter. And we're seeing much less of that as these deals are going back to the more traditional back end, you know, really, really back end of the quarter.

Now, we have the benefit in Q4 of having kind of the two periods of December 31st close and the January 31st close, but we are expecting the linearity more consistent with what we've seen in Q3 than what we saw a year ago.

And we have time for one additional question from Karl Keirstead with UBS.

Karl Keirstead -- UBS -- Analyst

Great. Thanks for fitting me in. Hey, Kelly, I just love to ask you about your perceived utility of the billings number. Traditionally, we look at that number as a decent proxy for business momentum.

But obviously, minus 10 in 4Q and plus 1% for the full year, I'm guessing you would argue that that's a poor proxy for Zoom's momentum. So, can you opine on that a little bit?

Because I think maybe there's some consternation about that negative 10 implied percent billings.

Thank you, Karl. I should have said this earlier. So, as a reminder, we don't guide to billings. We never have because we don't think that they are a good indicator for us because of the large percentage of our customers that are -- especially in the online segment of the business, that are on monthly contracts.

And so, because they bill and they pay us monthly, they don't show up in that number. And so, that's why it doesn't -- it isn't really a good proxy for you to use.

OK. And as a follow-up, Kelly, is there anything else that's skewing that DR number? You know, is there any change to invoicing terms or maybe more flexible payment terms to customers that maybe on the margin are impacting DR as well?

Nothing significant.

It's really more about, you know, the timing. You're talking about the deferred revenue specifically, right?

Yeah. Yeah.

Really about the seasonality of the renewals. I can't stress that enough for everybody. Remember, it's the two factors. It's the fact that they bill in Q1.

And then, so you're going to see an uptick in billings and deferred and collections. And then, that amortized over time. And then, the billings in Q4 are just a lot smaller. So, you have this double impact, right? Now, you've amortized a lot of the deferred that was picked up in Q1.

So, we're down at the lowest period in Q4. And the billings in Q4 are the lightest period to refill that bucket. So, it's going to -- this is going to be a phenomenon that we're going to see for years to come, as I've talked about, until, over time, we start to see, you know, more and more of our bookings happening in Q4.

But that's going to take a long time.

Makes sense. Thank you.

OK. Thanks a lot, Karl. Thank you, everybody.

And again, that does conclude our Q&A session for today. I'll go ahead and turn things back over to Eric for any closing or additional remarks.

Thank you. First of all, thank you for every Zoom employee. Great work. Thank you for every customer, partner, and investor's great support.

You all have a wonderful holiday season. Thank you again. See you in our Q4 meeting. Thank you.

Thank you, Eric. And again, this does conclude today's earnings release. We thank you all so much for your participation. And from our family to yours, may you have a safe and happy holiday season.

Enjoy the rest of your day. And again, we'll see you next quarter.

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Zoominfo to participate in upcoming investor conferences.

VANCOUVER, Washington, November 14, 2023 --( BUSINESS WIRE )-- ZoomInfo (NASDAQ: ZI), the go-to-market platform to find, acquire, and grow customers, today announced that ZoomInfo executives expect to participate in the following investor events. For more information on specific events, presentation times, and webcast details (if available), visit the "News & Events" section on the company’s investor relations website at https://ir.zoominfo.com .

UBS Global Technology Conference, Nov. 28, 2023

Wells Fargo TMT Summit, Nov. 29, 2023

Nasdaq Investor Conference, Dec. 5, 2023

Conferences that have presentations that are webcast, will be webcast live, and the replay will be available for a limited time under the "News & Events" section on the company’s investor relations website at https://ir.zoominfo.com .

About ZoomInfo

ZoomInfo (NASDAQ: ZI) is the trusted go-to-market platform for businesses to find, acquire, and grow their customers. It delivers accurate, real-time data, insights, and technology to more than 35,000 companies worldwide. Businesses use ZoomInfo to increase efficiency, consolidate technology stacks, and align their sales and marketing teams — all in one platform. ZoomInfo is a recognized leader in data privacy, with industry-leading GDPR and CCPA compliance and numerous data security and privacy certifications . For more information about how ZoomInfo can help businesses grow their revenue at scale, please visit www.zoominfo.com .

View source version on businesswire.com: https://www.businesswire.com/news/home/20231114384061/en/

Investor Contact: Jeremiah Sisitsky VP, Investor Relations [email protected]

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