Workday: Strong Q2, plans generative AI launches at Workday Rising

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Workday raised its fiscal 2024 subscription revenue outlook as the company said it has more than 65 million users under contract.The company also said it will preview generative AI tools at Workday Rising.

The HCM and financials software company reported fiscal second quarter net income of 30 cents a share on revenue of $1.79 billion, up 16.3% from a year ago. Non-GAAP earnings were $1.43 a share in the second quarter.

Wall Street was expecting Workday to report second quarter non-GAAP earnings of $1.26 a share on revenue of $1.59 billion.

Workday's operating cash flow in the second quarter was $425.3 million, up from $114.4 million a year ago. 

Key points:

• Workday said it has more than 5,000 core Workday Financial Management and Workday HCM customers.
• The company saw retail and hospitality generating $1 billion in annual recurring revenue to join financial services.
• Workday ended the quarter with cash, cash equivalents and marketable securities of $6.66 billion.

As for the outlook, Workday raised its fiscal 2024 subscription revenue guidance to $6.57 billion to $6.59 billion, up about 18% from the previous year. Third quarter subscription revenue will be about $1.68 billion. The company added that it is raising its non-GAAP operating margin target to 23.5%.

On a conference call, Carl Eschenbach, co-CEO, Workday, said the company is seeing deal scrutiny and has been focused on building out its management bench. Workday appointed Emma Chalwin, a former Salesforce executive, to chief marketing officer and last quarter hired Zane Rowe, formerly of VMware, as CFO.

Eschenbach also said that Workday has been focusing adding Financials customers and expanding its footprint. The US represents 75% of Workday's revenue. The company has been honing its sales, partner and go-to-market ground game. 

Workday's Aneel Bhusri, co-founder, co-CEO, said it has more than 3,000 customers sharing data with its machine learning models. Bhusri added that Workday will outline generative AI developments next month at Workday Rising.

Bhusri said Workday will preview copilot use cases as well as content generation and document understanding. "We believe that the enhanced AI and generative AI will enhance our win rates," he said. 

The co-CEO added that Workday plans to "offer generous usage based entitlements" for customers that opt-in to generative AI functionality. That approach could resonate with enterprise buyers, who are about to get hit with a bevy of generative AI upsells and add-ons. 

Bhusri said Workday isn't necessarily looking to charge for generative AI add-ons. Why? Because customers are sharing anonymized data in return for insights. Workday can use that data to train models. 

"The data is valuable to train LLMs and domain specific LLMs. We turn around and make our products more competitive," said Bhusri, who added that Workday is likely to create new products based on models. 

Constellation Research CEO Ray Wang said Workday's approach to data and generative AI makes sense. 

"Customers know that their ERP and HR systems securely store a lot of the training data that will power future AI innovations. It's good to see that Workday recognizes that this is the customer's data being used to create derivative insights and allow customers to remain loyal to Workday."

Palo Alto Networks: Takeaways from a Friday afternoon treatise

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Palo Alto Networks held a fourth quarter earning conference call on a Friday after market close and wound up outlining a three- to five-year vision. Give Palo Alto Networks CEO Nikesh Arora props for theatrics and pep.

The earnings turned out swell--especially when you consider the worst when a company delivers news on a Friday afternoon. On Aug. 18th shortly after 4:30 pm EDT, Arora kicked the call off.

"We apologize to people who are inconvenienced but as we had mentioned in our press release, we wanted to give ample time to analysts to have one-on-one calls with us over the weekend, and we have a sales conference that kicks off on Sunday. We want to make sure all our information was disclosed out there. So again, we apologize for the unique Friday afternoon earnings call. But clearly, we have enjoyed the attention."

We'll skip the actual fourth quarter results, but they were better than expected. Instead, it's worth focusing on a bevy of big picture items that made tuning in past Friday Happy Hour worth it. Here's a look at the big picture.

Cybersecurity vendors are under scrutiny. For years, security companies have had blank checks from enterprises. Who wants to be seen crimping on security? Higher interest rates have changed the dynamics.

"CFOs are scrutinizing deals, which means you have to be better prepared to answer their question and show the business value that you bring to them with your cybersecurity products," said Arora.

And that business value is what exactly? For Palo Alto Networks it's having a platform approach that can consolidate vendors, contracts, licenses and maintenance. Arora said:

"We can usually walk in and say, here, you can consolidate the following five, it doesn't cost you anymore, but you get a better outcome, and you get a modernized security infrastructure. So from that perspective, that strategy of ours is resonating. But there is more scrutiny. There are deals that go through multiple levels. There are some that get pushed. There are some that get canceled."

• Palo Alto Networks CEO Arora: Generative AI will favor those with strong data sets

Cybersecurity total addressable market expands. Arora argued that commerce, digital transformation, cloud computing, IoT, AI and every new advance cooked up only creates more threat vectors. Securing these advances is going to require integration. "We at Palo Alto Networks as well as, to some degree, different plays in the industry, started to look at the various parts of these markets and say, like, these things need to start getting integrated because you can't deliver great security outcomes without these things getting integrated," he said.

Platforms matter. Palo Alto Networks isn't alone with its platform approach to security. Across the large technology vendors, it's all about platform. Platforms win because customers don't have time to integrate everything. Arora said:

"It seems obvious now, but five years ago, we had customers who had more cybersecurity vendors than they had IT vendors. And it was a customer's responsibility to take these vendors, deploy them across their infrastructure, make them work together to deliver security outcomes."

Bleeding edge because there's no choice. Arora said "you have to stay at the bleeding edge because you don't need your customers to be at the bleeding edge." "It is our responsibility as a security company to make sure we take all the innovation, we distill it, we make it work in an integrated fashion and deliver it to our customers at the fastest pace possible because the bad actors are not waiting," he added.

Evergreen innovation. This concept from Palo Alto Networks is worth cribbing for the enterprise technology supply chain. "We want to maintain this notion of being an evergreen innovation company," said Arora. "You always have to be scanning the market understanding, where the world is going, where technology is going to see what potential security risks are going to get created in the adoption of that technology, in the deployment of that technology to make sure we're ahead of the curve, and we start delivering security by design."

AI can't be wrong in security. Palo Alto Networks will focus on "precision AI" that can't be wrong. "We have to build a lot of our own models. We have to train them. We have to collect first-party data. We have to understand the data. Today, we collect approximately 5 petabytes of data. Yes, 5 petabytes of data on behalf of our customers and analyze it for them to make sure we can separate signal from noise and take that signal and go create security outcomes for our customers," said Arora.

The takeaway: Palo Alto Networks plans to embed precision AI throughout its entire product line whether that's copilots, UI enhancements or insights.

Nvidia has pricing power: Q2 results surge, projects Q3 revenue of $16 billion

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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There's generative AI money to be made--at least if you're selling the GPUs that power the compute. Nvidia posted another ridiculous quarter and delivered an outlook that looks like a misprint.

Nvidia established itself as an AI growth darling last quarter. The second quarter will only bolster that position. The company reported second quarter revenue of $13.51 billion, up 101% from a year ago. Earnings were $2.48 a share and non-GAAP second quarter earnings were $2.70 a share.

Wall Street was expecting Nvidia to report second quarter earnings of $2.09 a share on revenue of $11.22 billion.

CEO Jensen Huang said Nvidia is benefiting from its GPUs as well as its Mellanox networking and switch gear. Infrastructure sales are booming as cloud providers and enterprises ramp up for generative AI workloads. Nvidia is seeing gains from its H100 AI infrastructure.

• Nvidia fleshes out generative AI vision from PC, workstation to cloud
• Nvidia data center revenue, outlook strong due to AI infrastructure boom
• Snowflake, Nvidia team up to enable custom enterprise generative AI apps
• AMD makes its case for generative AI workloads vs. Nvidia
• Snowflake launches Snowpark Container Services, linchpin to generative AI strategy

Indeed, data center revenue was $10.32 billion, up 141% from a year ago. Nvidia outlined a series of partnerships in the quarter with the likes of Accenture, ServiceNow, VMware and Snowflake. How AI workloads will reshape data center demand

Nvidia is also enjoying pricing power since rivals such as AMD are just ramping up AI efforts. For instance, Nvidia's second quarter gross margin was 70.1%, up 43.5% from a year ago.

The outlook for Nvidia also blew away estimates. Nvidia said third quarter revenue will be about $16 billion. Gross margins are expected to improve to 71.5% to 72.5% in the third quarter.

In prepared remarks, CFO Colette Kress said:

"Data Center revenue was a record, up 171% from a year ago and up 141% sequentially, led by cloud service providers and large consumer internet companies. Strong demand for the NVIDIA HGX platform based on our Hopper and Ampere GPU architectures was primarily driven by the development of large language models and generative AI. Data Center Compute grew 195% from a year ago and 157% sequentially, largely reflecting the strong ramp of our Hopper-based HGX platform. Networking was up 94% from a year ago and up 85% sequentially, primarily on strong growth in InfiniBand infrastructure to support our HGX platform." 

On a conference call, Kress said Nvidia's supply chain and manufacturing relationships have been built up over the last decade and those partnerships are paying off now. She said:

"There is tremendous demand. Our supply chain partners have been phenomenal in supporting our needs. We have lined up additional capacity and components. We expect supplies to increase each quarter through next year."

Kress noted that demand was strong among cloud providers, consumer Internet companies and enterprises, who are looking at on-premises generative AI workloads. "Virtually any industry can benefit from generative AI," she said.

By the numbers:

• Nvidia said it has authorized an additional $25 billion in stock repurchases. 
• Gaming revenue was $2.49 billion, up 22% from a year ago. 
• Automotive revenue was $253 million, up 15% from a year ago. 
• Pro visualization revenue $379 million, down 24% from a year ago. 

Snowflake Q2 better than expected

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Snowflake's second quarter results were better than expected as the company grew its customer base 25%. The company ended the quarter with 402 customers generating more than $1 million in revenue. 

Snowflake reported a second quarter net loss of $226.87 million, or 69 cents a share, on revenue of $674 million. The company reported non-GAAP earnings of 22 cents a share. Wall Street was expecting Snowflake to report non-GAAP second quarter earnings of 10 cents a share on revenue of $662.28 million. 

Product revenue for the quarter was $640.2 million in the second quarter, up 37% from a year ago. 

CEO Frank Slootman said enterprise data is in the center of AI and machine learning efforts. "Enterprises and institutions alike are increasingly aware they cannot have an AI strategy without a data strategy," he said. 

The quarter was a stabilization quarter after the first quarter spurred growth worries. 

• Snowflake launches Snowpark Container Services, linchpin to generative AI strategy

Twilio fleshes out CustomerAI vision with Customer Data Platform enhancements

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Twilio is bringing generative AI to its Customer Data Platform (CDP) in a bid to use first party data and large language models to predict customer behavior and spur engagement. Twilio is also adding Databricks' Zero Copy architecture to CDP.

The news, announced at Twilio's Signal conference, is part of a broader push under a product strategy called CustomerAI. The game plan is to use generative AI to activate engagement for Twilio Engage, Flex and Segment as well as to provide an AI-powered CDP that can enhance profiles and personalize in real-time. What Twilio is really after is a flywheel that can provide "precise 1:1 personalization" with data and signals from every customer engagement and interaction.

CEO Jeff Lawson said "the real value unlock for AI will be pairing large language models with first party data sets."

Among the key announcements from Twilio:

• Segment B2B Edition and Zero Copy Architecture. Twilio launched Segment B2B Edition with Linked Profiles to connect relationships across all customer data. With the new edition, Segment will use Linked Profiles to enable customers to build a graph of relationships that link events, experiences and profiles with data sets that include accounts, subscriptions, products, household and other data sets. With the expanded data graph, enterprises can train AI models, build advanced segmentation and provide personalized recommendations.
• Zero Copy Architecture, which is part of a partnership with Databricks to allow customers to query data warehouse and data lake data directly without copying and Extract Transform and Load. Zero Copy from Databricks will allow Twilio's CDP to ingest data in new pathways. Twilio Engage and Twilio Flex will be able to onboard customer data. Databricks launches Lakehouse Apps, aims to be development platform
• Predictions and Voice Intelligence. Twilio Predictions aims to give marketers predictive AI without technical expertise. Predictions is powered by Segment data. Voice Intelligence deploys conversational speech recommendations to deliver insights using natural language understanding. Twilio also said that its Virtual Agent with Google Dialogflow CX is generally available.
• Generative AI tools in Twilio Engage, Flex and Segment. Twilio Engage will get Generative Email Design to complement existing AI-powered features. Generative Journeys spins up customer journeys based on campaign type. Twilio Flex will get generative AI tools with Google Cloud that can provide recommendations for next best actions for contact center agents.

Twilio's Signal news landed a few days after the company’s second quarter earnings. Twilio reported revenue of $1.04 billion, up 10% from a year ago, with a net loss of 91 cents a share. Non-GAAP earnings were 54 cents a share. Twilio ended the quarter with 304,000 active customer accounts.

Lawson on the earnings call said customers were still in learning mode with generative AI. He said:

"Customers are still very much in a learning mode and planning for the future mode, but not necessarily in deploying things actively most. And so, I think it's a really constructive conversation.

When I look at CustomerAI and what we can do with artificial intelligence, I think this is the glue that brings together Segment and Twilio communications into this one, customer engagement platform that we've been talking about for quite a while.

And I think AI is arriving even sooner than we thought in terms of generative AI to be able to bring a lot of those benefits to the table."

Constellation Research's take

Constellation Research analyst Andy Thurai said:

"Twilio is trying to combine LLMs with proprietary data about their customers. While Twilio had the customer data platform (CDP) before, using that data and LLM to predict customer behavior using AI is a new addition. The addition of Zero Copy Architecture in collaboration with Databricks is compelling. While Twilio CDP can offer customer information, it may not be always up to date. With this initiative, Twilio aims to query data lakes, in real-time, to get additional information to enrich their CDP data without ETL. Twilio has a good partner with Databricks.

The graph connection of Linked Profiles is also interesting. It can potentially unearth certain events and make meaningful personalized marketing messages and/or offers that might be timely and potentially appealing. While these are all good additions and appealing, it is hard to move the needle in the CDP, CRM, and marketing tooling category as the competition is very high. Twilio took a good step in the right direction, but competitors are doing the same or better things already."

VMware Cloud launches three tailored management options

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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VMware outlined deployment and management options for VMware Cloud to address private, public and hybrid use cases.

At VMware Explore in Las Vegas, the company, which is in process of being acquired by Broadcom, is addressing enterprise demand for multicloud workloads. A Constellation Research report by Dion Hinchcliffe recently outlined how companies were rebalancing their public and private cloud workloads. See:

• Private Cloud a Compelling Option for CIOs: Insights from New Research

Given that backdrop, VMware is working to provide more flexibility. VMware Cloud is available in five editions--Essentials, Standard, Pro, Advanced, Enterprise--with three deployment and management options. The new options include:

• Customer Managed, where VMware Cloud is deployed in enterprise data centers or colocation partners.
• VMware Managed, which is VMware Cloud on AWS as a managed cloud service. VMware Cloud on Equinix Metal falls into this category.
• Provider Managed, which is available from partners including IBM Cloud.

Hinchcliffe said the VMware Cloud moves fill a void. He said:

"With today's announcements, VMware is clearly setting its sights on being a top leader in the fast-emerging multicloud frontier. By converging the strengths of its on-premises and public cloud solutions into VMware Cloud, the company aims to offer a consistent, integrated experience seamlessly across various cloud settings -- be it on-premises, hyperscale clouds, or partner-based cloud environments. Such convergence will help businesses to better manage their increasingly complex and diverse cloud terrains, highlighting VMware's intent to own the simplified multicloud management space.

Their three tailored management options – Customer Managed, VMware Managed, and Provider Managed – highlight the flexibility customers want in spreading their cloud workloads across various providers, including private cloud, where they make the most sense. This caters to businesses of varying needs and competencies, with VMware Cloud's adaptability underscored by First Citizens Bank, which they prominently cited in the news. The bank leverages VMware Cloud's consistency to integrate acquired banking systems efficiently, thereby illustrating a real-world application of VMware’s multicloud solution in streamlining operations and reducing integration risks during major business transformations, like mergers and acquisitions."

VMware also outlined NSX+, a new cloud-managed service offering of NSX for multicloud deployments. NSX+, delivered as SaaS, provides one cloud operating model that includes networking and security across VMware Cloud. NSX+ also is adding virtual private clouds.

Hinchcliffe said:

"The introduction of the new NSX+ solidifies VMware’s leadership in data center software-defined networking (SDN). NSX+ is envisioned as a one-stop cloud-managed service that consolidates networking and security needs for multi-cloud contexts. Its SaaS model and central management amplify operational simplicity, and the introduction of NSX+ Virtual Private Clouds (VPCs) speaks to VMware's commitment to providing isolated, secure, and scalable cloud solutions.

The upshot of all this is that these major moves in multicloud capability seeks to position VMWare at the forefront of the multicloud age, making the often daunting aspects of dynamic cloud management more streamlined and efficient for businesses around the world."

Other announcements from VMware include:

• Private AI services that aim to bring compute and models to enterprise data. VMware announced VMware Private AI Foundation with Nvidia and VMware Private AI Reference Architecture for Open Source.
• AI integrations for VMware's Anywhere Workspace platform, which include virtual desktop infrastructure and apps, endpoint management, security and digital employee experience. VMware is adding Insights and Playbooks to flag anomalies and IT remediation workflows.
• VMware Edge orchestration and management tools, services aimed at retailers and managed connectivity options.
• Platform updates to VMware Tanzu to deliver applications across the enterprise and multiple clouds. There's also a developer portal with curated app templates and admin console.

IBM watsonx launches COBOL to Java generative AI coding tools

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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IBM has launched watsonx generative AI tools to speed up translation from COBOL to Java on its IBM Z mainframes.

The watsonx Code Assistant for Z, which will be generally available in the fourth quarter, is aimed at its mainframe customer base that's looking to modernize its COBOL applications. IBM said that it will preview watsonx Code Assistant at its TechXchange conference Sept. 11-13.

IBM is rapidly building out its watsonx Code Assistant portfolio, which will include IBM watsonx Code Assistant for Red Hat Ansible Lightspeed. Coding is one of the big productivity use cases for generative AI and large language models.

• IBM Delivers AI How It Is Meant to Be With Watsonx
• IBM launches Watsonx, an AI platform with open source models, governance

According to Big Blue, the company's watsonx.ai code model will have knowledge of 115 coding languages. The aim is to automate coding as much as possible. In addition, the COBOL use case can alleviate a shortage of developers. IBM research has found that enterprises are more likely to use existing mainframe assets than rebuild applications from scratch over the next two years. Lack of resources and mainframe skills is a big challenge.

IBM's watsonx Code Assistant for Z also aims to keep its IBM Z systems current. IBM's mainframe business is strong and booms with every new Z release. By helping customers incrementally migrate COBOL code to more modern platforms, IBM also keeps the mainframe relevant.

Watsonx Code Assistant for Z is expected to include IBM's Application Discovery and Delivery Intelligence (ADDI) inventory and analysis tool that will outline the steps and opportunities in transforming COBOL code to Java code. IBM is betting generative AI will be a better option than rewriting all application code in Java, migrating to public cloud and creating code that's hard to maintain.

Here's a demo.

Constellation Research's take

Constellation Research analyst Andy Thurai provided his take on the news.

"The code generator LLMs are dime a dozen in the market now. From AWS Code Whisperer to Microsoft Github Copilot to OpenAI Codex to ChatGPT to Google T5 there are major players in the market. There are also smaller players competing in this market: Tabnine, Replit Ghostwhisperer, Codestarter, CodeWp, MutableAI, CodeSquire, Figstack, Datamaker, AirOps, What the Diff, AI query, Adrenaline, Adept, Alphacode, Debuild, Codiga, Locofy, AIXcoder, Mintlify, Maya, Codis, Durable, Bloop, Enzyme, Dhiwise, Codota, Anima, Codacy, Warp, Metabob.

The core of this initiative is to make programmers more efficient by using English as a programming language (possibly other human languages in the future). Enterprises assume the productivity of developers will improve. However, the code spewed out by these solutions can be security risks and infringe on IP and proprietary software.

The key part of any software company, outside of its core business value proposition, is its developers. Obviously, every company employs tons of software professionals and always struggles to upskill them, make them efficient, use DevOps processes, and agile methodologies, build things faster, and be more efficient. These generative AI tools can help.

IBM watsonx Code Assistant is somewhat unique. Watsonx Code Assistant is predominantly trained with code for the purpose of code generation unlike the other LLMs, which are general purpose. This LLM is task-specific and can be classified as a Specialized Language Model (SLM). One of the major issues with mainframe modernization is finding skilled developers. Finding skilled COBOL programmers is extremely difficult either because of workforce mass resignation (the great resignation) or retirement. Finding developers who can understand COBOL and program in Java is even more difficult. Watsonx Code Assistant could be useful to fill these gaps. These models are trained to understand mainframe COBOL applications and spit out object-oriented Java code that can be used to make mainframe modernization easier.

Because IBM trained this model with its own mainframe code, there will be no legal or ownership issues that can arise. However, the announcement and the release are still in preview mode. Let's hope IBM can execute."

Zoom sees enterprise traction, cites Contact Center, Team Chat wins

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Zoom Video Communications said Zoom Contact Center has passed the 500-customer mark in the second quarter as the company tries to expand past its core video collaboration tools. The company raised its fiscal year outlook based on enterprise demand.

The company reported second quarter net income of $182 million, or 59 cents a share, on revenue of $1.14 billion, up 3.6% from a year ago. Non-GAAP earnings were $1.34 a share. Wall Street was expecting non-GAAP earnings of $1.05 a share on revenue of $1.12 billion.

Zoom CEO Eric Yuan said the company saw enterprise strength in the second quarter and touted AI features including Zoom IQ Meeting Summary and Team Chat Compose and Intelligent Director. Zoom Virtual Agent and Zoom Contact Center are also seeing traction. Zoom also added that its Workvivo integration is on track. 

• Zoom's customer data terms for training AI may be just the beginning

The contact center and customer experience space has been heating up as RingCentral and Five9 are making acquisitions and broadening their reach. RingCentral bought Hopin Events in a move to encroach on Zoom's core market.

Yuan said Zoom Contact Center is adding 90 new features and enhancements per quarter. "We look forward to adding additional products to this suite to expand our native CX capabilities and revenue streams."

Zoom is also expanding into the team software space and cited US Postal Service as a key customer win. Yuan said:

"More customers are getting Zoom Team Chat, driven by increased adoption of Zoom One and new features like Continuous Meeting Chat. We have two Fortune 15 companies, one major consulting firm, a global F&B brand and leading law firm using Zoom Team Chat as core means of text-based communications."

Zoom's second-quarter enterprise sales were $659.5 million, up 10% from a year ago. Online revenue, which is more small business focused, was $479.2 million, down 4.3% from a year ago. Zoom ended the quarter with 218,000 enterprise customers, up nearly 7% from a year ago. According to the company, 3,672 customers contributed more than $100,000 in trailing 12 months revenue.

As for the outlook, Zoom projected third-quarter revenue between $1.11 billion and $1.12 billion with non-GAAP earnings between $1.07 a share to $1.09 a share. For the fiscal year, Zoom projected revenue between $4.48 billion to $4.49 billion with non-GAAP earnings of $4.63 a share and $4.67 a share.

Research:

• Connecting Experiences From Employees to Customers