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Zoom CFO Kelly Steckelberg joins Yahoo Finance Live to discuss the company's earnings, making the Zoom service free for anyone in the Ukraine, and the outlook for growth as the pandemic comes to an end.
ALEXIS CHRISTOFOROUS: Welcome back to Yahoo Finance Live. Zoom was a pandemic darling and just delivered quarterly results that edged past Wall Street's expectations. But the company did provide disappointing forecasts for both the April quarter and the full year. Meantime, the stock is down some 80% from its peak back in October of 2020.
Joining us now is Zoom CFO Kelly Steckelberg. Kelly, good to see you again. Look, we all saw it coming, I think even inside Zoom. As we continue to come out of this pandemic growth at Zoom has slowed in comparison to where the business was at the peak of the pandemic.
But you announced that the company is going to be pivoting and focusing more on the enterprise customer, the bigger customer. Tell us why you're doing that and what it might mean for the bottom line.
KELLY STECKELBERG: Sure. So, first, we were really pleased with our FY22 results. We grew to $4.1 billion with 55% year-over-year growth. And as we're looking forward, we really see the long-term sustainable growth for the business coming from these large customers that are touched by our direct organization.
During the pandemic, we really benefited from customers that came to us buying from our online channel. And it's about 50% of our revenue today. But as you said, we're starting to disclose metrics that are more targeted around our enterprise business, which is where we think we'll really see long-term growth even as organizations are thinking about going back to the office.
They want to make sure they provide the flexibility and support for their employees in this new hybrid environment, and that means equipping them with Zoom, bringing it into their conference rooms through our Zoom rooms, as well as Zoom events, which will also start to be the future of how organizations have hybrid events.
KARINA MITCHELL: Kelly, on a personal note, I just have to say how thankful I've been for Zoom because I've been able to attend family weddings on the other side of the world, have been able to attend gatherings, bat mitzvahs, funerals as well-- and I'm so thankful that Zoom was able to help deliver that-- on a personal note. You know, so many companies have been dealing with margin issues, and yet your company managed to grow margins 76%, up from 74%. What do you think attributes to that?
KELLY STECKELBERG: First of all, we're so great to hear-- happy to hear that we were able to support you during this time. And we hear that from our customers all the time. And in terms of our overall margin structure, so we have always had a very efficient structure the way that our organization as well as our hardware and technology has been built.
And so as you said, we had very strong gross margins during the period. And that is due to the fact that we are working on migrating a lot of our traffic from the public cloud, where we really relied on during the height of the pandemic, back into our own servers and our co-located data centers. And we have a very efficient team that's focused on this. So that's what really enables us to bring a lot of value to our customers, to provide a lot of value in terms of our pricing, and still provide those high margins to our investors
ALEXIS CHRISTOFOROUS: Kelly, can you tell us what Zoom's exposure is to Russia and Ukraine? And we're seeing more and more corporations take a stand, I guess, against what's going on there. We know that Apple, Boeing, ExxonMobil either taking their products out of Russia or saying they're not going to offer their services. Is Zoom making any sort of statements right now regarding that?
KELLY STECKELBERG: So, first of all, our hearts go out to everybody impacted in the region of Ukraine. And we feel very fortunate as a company that we don't have any employees directly in either of those regions. But we do have some extended family members of our employees there. And we spend a lot of time thinking about this.
In terms of Russia, we don't feel like cutting off the means of communications for the citizens there would be the right thing to do right now, especially as we're in the midst of this pandemic still. So we constantly are monitoring the situation. Of course, we'll comply with any sanctions.
And we are also currently working on lifting our 40-minute limit for the region of Ukraine. So that would make our service available for free for anyone there. And we're very close to bringing that to light.
KARINA MITCHELL: That is certainly a lifeline, I'm sure, there. You know, we've heard so much recently, Kelly, about cybersecurity risks. And I'm wondering, how is your company positioned to try and avoid those should they happen?
KELLY STECKELBERG: So we've invested a lot in security and privacy over the last couple of years. We have an amazing CISO, Jason Lee, who keeps us all ever-vigilant around this issue. And given the heightened risk that we're all facing today, they are really front and center. And this is an area-- a concern that we take very seriously. It's an area that we continue to invest in as a company.
And we do a lot of education, because we have almost 7,000 employees around the world. And all of us need to be attuned to this. And Jason does a great job of keeping us all focused on that every single day.
ALEXIS CHRISTOFOROUS: And just a word about the competition in your space. I mean, it's pretty intense-- you've got Microsoft Teams continuing to expand and innovate, RingCentral, which I know was a former business partner of Zoom now looking to become a full communication platform. How are you staying relevant? And how are you innovating? I know you have the Zoom Phone-- how much is that part of the equation going forward, and perhaps differentiating by moving away from some of the video conferencing services that you offer.
KELLY STECKELBERG: So first of all, Zoom Phone, we are thrilled with the momentum that we're seeing there. That is our Cloud PBX solution. We had a record quarter in Q4, selling over 550,000 seats of Zoom Phone. And we are continuing to innovate.
As I mentioned earlier, one thing we're hearing from our customers is they want to understand how to bring their employees back to the office and do it in an inclusive way. And so we have some amazing innovations around Zoom Rooms, including things like smart gallery and companion mode, which are really great tools to recreate the experience we've all grown used to during this pandemic of seeing everybody on the screen. We also are thrilled that just last week, we announced the general availability of Zoom Contact Center.
So this will be our cloud contact center solution that will be fully integrated into our suite of products, built on modern architecture. And so we are continuing to invest in R&D and bring these products to our customers that solve the problems that they ask us to help them with every single day.
KARINA MITCHELL: All right, we will have to leave it there. Thank you so much. That was a great conversation and great to hear about your efforts in Ukraine. Kelly Steckelberg, Zoom CFO, thanks for your time today.