Zoom in 'early stages' of security deal with Google: CFO

Yahoo Finance's Alexis Christoforous and Brian Sozzi speak to Kelly Steckleberg, Zoom CFO, about the latest earnings report.

Video Transcript

ALEXIS CHRISTOFOROUS: All right. An absolutely stellar, outstanding-- what other words can you use, adjectives can you use, for Zoom Video Communications' first quarter? Consumers across the globe were mandated to stay at home. The platform became a household name. We saw revenue jump 169% in the latest quarter. The stock is up better than 200% year-to-date.

Joining us now is Zoom's CFO Kelly Steckelberg. Kelly, good to see you again. I understand it was your birthday the day this earnings report was released. So happy belated, and what a birthday present, right? 169% jump in revenue. I guess the street's question now is, as economies begin to reopen and people-- some people start to go back to the office, how do you hold on to that momentum, if at all, at Zoom?

KELLY STECKELBERG: Thank you. Good morning. And we're really building a business for the long-term. You know, we had our customers with greater than 10 employees grow over 350% in Q1. And that really sets a base for us to continue to provide more services to them to expand Zoom meetings, as well as our relatively new product, Zoom Phone, to sell into them. And as they think about going back to the workplace, to add in things like Zoom Rooms, which are a conference room solution.

You know, we've also seen a tremendous increase in demand for our webinars product as people look to bring what was previously on-premise events virtual. And these are users' conferences, investors' conferences, which I've done a few in the last few days, and I think it's gonna be a very long time before we go back to a state where we're really reconvening as we were before. So I think we're looking forward to a hybrid approach, where people have now really integrated video into their lives, and they're gonna continue to do that, even though they might be moving around in the world more again.

BRIAN SOZZI: Kelly, your guidance for the full year, your new guidance for the full year, applies an acceleration in your business. What gives you that level of confidence? We are starting to go back to work. We saw that in the jobs report today. How confident are you that what you saw in the first quarter could be sustained?

KELLY STECKELBERG: Well, we see already-- well, we're a month into Q2 already. And we continue to see elevated demand, not at the same level that it was in Q1, where we were really at the height of everybody trying to figure out how to work in this new world, but our pipeline coming into Q2 remains really strong. We still have lots of organizations and businesses that are thinking about keeping their employees safe and not returning to work for a while.

We announced to our team yesterday that we will not be reopening our offices until at least January. So I don't-- and I don't think that we're alone in that. So while we're starting to see parts of the economy that are coming back to life, which is great, and people returning to work, I think there are gonna be parts of it that are going to continue working this way for several months, if not several quarters ahead.

ALEXIS CHRISTOFOROUS: Yeah, unfortunately, that's gonna be the new normal for a number of companies, Kelly. You know, I read that-- and it's been reported-- that Zoom will not make its end-to-end encryption available to free basic users. Why did the company make that decision? I mean, are free users not getting optimum safety?

KELLY STECKELBERG: So we're in early stages of our plan for end-to-end encryption. But this is really about, how do you balance security that we're providing on the platform, as well as protecting potentially vulnerable adult-- um, sorry, vulnerable communities, like children, that might be susceptible if there were potentially the wrong people that had end-to-end encryption? And that's the constant balance that we're thinking about. And the idea is that you give end-to-end encryption to users that are known, so that it doesn't end up in the wrong hands.

BRIAN SOZZI: Kelly, we saw reports that Zoom is looking to hook up with Google on the security front. Is that deal done and dusted? Or is it still in the process of being worked out?

KELLY STECKELBERG: That is still in early stages. So we'll have more to talk about that in the future.