Video conferencing company Zoom is pinning its growth plans on investment in AI, after reporting its first fourth quarter net loss since 2018.
Reporting results on Monday, Zoom said it posted a net loss of $104 million for the fourth quarter of its fiscal 2023, ended January 31, compared to a profit of $490 million in the year-earlier period. Online revenue was also down 10% year over year to $481.7 million.
The loss was largely a result of stock-based compensation expenses. Otherwise, Zoom recorded fourth quarter total revenue of $1.1 billion, up 4% year over year, with total revenue for the fiscal year 2022 reported as $4.4 billion, up 7% year over year.
Additionally, fourth quarter revenue from enterprise customers was up 18% year over year to $636.1 million, and full fiscal year enterprise revenue was up 24% year over year, to $2.4 billion.
Although on balance, the results were largely positive, they’re a far cry from the dizzying levels of growth the company experienced during the pandemic and reflect some of the challenges currently facing the tech sector.
Earlier this month Zoom announced that it would be cutting 1,300 jobs, around 15% of its workforce.
Alluding to this on a call with analysts after the results were announced, company CFO Kelly Steckelberg said that “there's a restructuring happening to really focus the resources on our enterprise customers and be as efficient as we can in our commercial and small business teams.”
On the same call, CEO Eric Yuan described the cuts as a “painful exercise” but said the decision allowed the company to reset to weather the economic environment.
The company has seen some contraction in the number of Zoom seats being bought by customers, as organisations around the world continue to look for ways to tighten their budgets, Yuan said.
Zoom has also experienced headwinds in terms of currency impact, online contraction, and deal scrutiny that continued into the company’s fourth quarter, Yuan added.
Despite the slowdown, Yuan appeared optimistic about the direction of the company as it moves into its next financial year.
Following recent announcements from both Microsoft and Google around their investments in Chat GPT and Bard, respectively, Yuan noted on the call that "the age of AI and large language models has arrived” and that Zoom wants its customers to benefit from the technology.
Commenting on the company’s fiscal 2024 strategy, Yuan said Zoom will look to “redefine teamwork” by offering “new immersive experiences that improve employee engagement and modern collaboration tools for ideation across locations and modalities.”
He also said that by embedding AI into more workflows, Zoom will be able to help users work smarter, noting that features underpinned by AI and currently available on the Zoom platform, such as translation, captioning, and meeting summary tools, are just the beginning.
“All of this comes together as a collaboration platform that unites people to unlock their potential, enables more dynamic and intelligent experiences and allows us to reimagine productivity and work,” Yuan said.