Intel CEO Gelsinger out: 5 looming questions ahead

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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Intel said CEO Pat Gelsinger has retired effective Dec. 1 and will be replaced by two interim co-CEOs as the chipmaker tries to catch up to the AI age.

In a statement, Intel said Gelsinger is out and David Zinsner and Michelle (MJ) Johnston Holthaus will be interim co-CEOs. Intel has begun a search for a permanent CEO. Holthaus has been promoted to be CEO of Intel Products Group, which includes the company's client computing, data center and AI and network and edge units. Zinsner, CFO at Intel, joined the company in 2022 after being CFO at Micron Technology.

It's unclear who will be the new CEO of Intel, but one thing is certain--there will be a lot of work ahead. Here's a look at some of the big questions the new Intel leader will have to resolve.

Can Intel really recover? Intel has largely missed the AI turn and Nvidia has clearly run off with the spoils of the buildout. GPUs are taking over data centers and Intel has been slow to the starting line. In addition, AMD is now Nvidia's GPU competitor and is beating Intel in the data center with its EPYC franchise. In addition, Intel's Foundry unit is losing money at a rapid clip and can't compete with the scale of TSMC. Intel has a multi-year turnaround ahead in a chip industry that has moved to an annual cadence. Perhaps Gelsinger fixed enough to give Intel a shot. We'll see.

• Intel defends Gaudi 3 as it misses 2024 sales targets

• Intel's Q2 wipeout: Guidance cut, 15% layoffs, dividend suspended

Intel has fallen so far that rumors swirled that Qualcomm could pick up the company for pocket change--assuming regulators would ever approve it. 

Will AI inference save the day? The news of Gelsinger's departure comes as AWS re:Invent kicks off and Intel has a bevy of sessions. Some of those sessions revolve around inference workloads. For Intel's CPU-heavy lineup to succeed, AI inference at the edge will have to assume more workloads. In 2025, those edge workloads should become more popular. Intel could become more AI relevant for inference workloads, but Qualcomm, AMD and Nvidia are all in the mix. Nvidia CEO Jensen Huang makes sure he references the company's inference business every quarter. 

• Nvidia CEO Jensen Huang has a dream...
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• AMD's Q3 on target, data center unit revenue growth 122% from a year ago

Is Intel too important to fail? Intel has secured US government backing and just finalized $7.86 billion in CHIPS Act funding. Intel is getting this funding because it's one of the few players with manufacturing in the US. Intel used to be a US tech champion, but now is limping former giant that's still strategically important. Boeing is in a similar spot. Intel will likely recover to some degree with government backing.

Can Intel's foundry business compete? Intel Foundry has more independence and key partnerships, but at the end of the day it has to compete with TSMC. It's fairly obvious that Intel Foundry is set up as a quasi-independent unit because its capital requirements could bring down the company as a whole.

• Intel to give Intel Foundry more independence, expands AWS partnership
• Is AI data center buildout a case of irrational exuberance?
• On-premises AI enterprise workloads? Infrastructure, budgets starting to align

Will technology buyers come back? Technology buyers--consumer and enterprise--haven't completely dumped Intel, but it's hard to ignore AMD's traction in the data center and Qualcomm's encroachment in the PC market. Back in the day, you couldn't get fired for buying Intel. Today, you might if you're betting on Intel for AI workloads over Nvidia. The idea that Intel is a lock in servers has also faded. ARM architecture is also dominant and Intel has few answers. Nostalgia doesn't count for much in an IT budget.

Oracle Database@AWS hits limited preview

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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Oracle said that customers can now access Oracle Database@AWS in limited preview. The limited availability landed just a few weeks after Oracle and AWS announced their partnership.

With the limited preview, enterprises can run Oracle Exadata Database Service on Oracle Cloud Infrastructure (OCI) in AWS. Availability starts in the AWS US East Region with an integrated and native experience. Oracle and AWS announced their partnership in September and is likely to have a significant presence at AWS re:Invent this week.

• Oracle databases everywhere with AWS partnership, strong Q1 results
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As previously noted, Oracle Database@AWS enables the database giant's customers to migrate Oracle workloads to the cloud with a low latency network connection to AWS applications. Oracle operates and manages the Oracle Exadata Database Service.

Constellation Research analyst Holger Mueller said:

"Oracle and AWS waste no time to make AWS Cloud the third public cloud to give customer the choice to build their Next Generation Applications on AWS with their data being in Oracle Database. The BYOL option may move some Oracle customers from on-premises to the cloud in 2025, faster than expected."

CTO Larry Ellison and AWS CEO Matt Garmin have touted the partnership. For the companies, which have been cloud combatants, tighter integration is a win for many joint customers.

In September, State Street CTO Andy Zitney said the deal will be a win for his company, a big Oracle Exadata and AWS customer. "we were starting down the journey of starting to integrate the clouds, and this comes right at the perfect time to expedite that and make it easier for us," said Zitney. "It will help us accelerate our digital transformation."

Key items about Oracle Database@AWS include:

• Simplified billing and administration as well as unified customer support.
• Data connections that provide insights without building data pipelines.
• Flexible options to migrate.
• A procurement experience via AWS Marketplace. Customer usage of Oracle Database@AWS qualifies for existing AWS commitments and uses Oracle license benefits.
• Reference architectures, landing zones and best practices.
• The ability to unify data across AWS and AWS for generative AI applications.

Santa isn't bringing you an AI PC in 2024

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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That AI PC upgrade cycle, touted most of the year by the tech industry, is being delayed by companies and consumers.

Earnings results from Dell Technologies and HP indicate that a long overdue PC refresh cycle is going to be delayed.

Jeff Clarke, Dell's Chief Operating Officer, said during the company's third quarter earnings call:

"Enterprise demand was promising, though less than expected as we saw some demand push into future quarters. Profitability in the Commercial space held up well sequentially as customers continue to purchase more richly configured devices.

Our Consumer business was weaker-than-expected as demand and profitability remain challenged. The PC refresh cycle is pushing into next year, but has significant tailwinds around an aging install base, AI-driven hardware enhancements like battery life and Windows 10 end-of-life."

Dell CFO Yvonne McGill said it's not a case of if the AI PC refresh cycle will happen, but when. Clarke added that enterprises are holding off on PC purchases because they want futureproof laptops. Why be first in the AI PC upgrade cycle when specs will only improve?

• PC industry's big dream: AI enabled PCs spur upgrade cycle
• PC upgrade cycle to be driven by AI, but calling timing has been difficult

Fortunately for Dell, the vendor can offset any AI PC hiccups with booming AI server sales. HP Inc. is clearly more tethered to the slow-motion PC upgrade cycle. Former sibling HPE has all the AI server momentum.

HP CEO Enrique Lores said commercial demand in its fiscal fourth quarter was solid, but consumers held back.

Here's a look at HP's Personal Systems fourth quarter results.

Lores said the company is betting that genAI features can boost PC sales. "Our expanded AI PC portfolio is now equipped with HP AI Companion, a bespoke application. The app uses generative AI to help analyze private files, create content or respond quickly to key tasks," he said.

HP Boost is a feature that allows data scientists to share GPUs remotely. Lores said that 15% of PC sales in the fourth quarter. HP's Personal Systems unit had revenue growth of 2% in the fourth quarter due to enterprise demand. Lores said:

"We saw continued pressure on commodity cost, which impacted operating profit. And we will continue to take actions on pricing and cost to mitigate this over time. We saw gains in worldwide PC market share year-over-year, particularly in high value categories, including commercial and consumer premium. We believe there is more opportunity here and we will continue to prioritize these categories."

HP remains upbeat about the AI PC upgrade cycle and higher average selling prices. Lores added that in three years, HP's personal systems volume will be 40% to 60% of sales.

"We continue to have an aged installed base that needs to be refreshed, which has been driving the growth that we have seen in Q4," said Lores. "The mix of AI PCs will continue to grow, which also is going to create a tailwind for the business."

Constellation Research analyst Holger Mueller said:

"HP Is practically standing still, keeping its position, potentially even going backwards when adjusting for inflation. PC markets have not recovered, and all eyes will now be on the AI PC carrying a strong Q4 with consumers – or not. It certainly has not spurred an upgrade flurry for enterprise PCs."

There are green shoots for the AI PC cycle. Best Buy said laptop sales grew 7% in the third quarter and consumers are showing interest in upgrading and replacing laptops.

Best Buy's Jason Bonfig, senior executive vice president of customer offerings and fulfillment, said:

"We're excited to what's going to happen in the future with AI. We think it's a phased approach. There'll be new features in AI across all the different platforms. And it's not just Microsoft, it's obviously Apple and Google are there as well. But right now, we do think the biggest thing that's driving is really that upgrade and replacement. And that will probably continue into next year as we think about the end of life support of Windows 10 that happens in October of 2025."

Just another year to go.

CrowdStrike Q3 strong, puts outage in rear view mirror

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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CrowdStrike reported a better-than-expected third quarter results and said it retained 97% of customers as it moved past its July outage.

The company reported a third quarter net loss of $16.8 million, or 7 cents a share, on revenue of $1.01 billion, up 29% from a year ago. Non-GAAP earnings were 93 cents a share. The company delivered annual recurring revenue of $4.02 billion, up 27% from a year ago.

Wall Street was expecting CrowdStrike to report third quarter earnings of 81 cents a share on revenue of $983.03 million. Analysts leading up to the earnings were confident that the company has put its July outage behind it without a hit to customer retention. CrowdStrike recently said it would acquire Adaptive Security.

CrowdStrike’s report comes a week after Palo Alto Networks report, which was better than expected as the company indicated its ongoing platformization strategy was winning share. CrowdStrike has also been seen as a company that can benefit as enterprises consolidate vendors and platforms.

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Module adoption rates for five or more modules was 66% in the third quarter.

As for the outlook, CrowdStrike projected fourth quarter revenue of $1.0287 billion to $1.035.4 billion with non-GAAP earnings of 84 cents a share to 86 cents a share. For fiscal 2025, CrowdStrike projected revenue of $3.923.8 billion to $3.930.5 billion. Non-GAAP earnings for the year will be $3.74 a share to $3.76 a share.

On a conference call with analysts, CrowdStrike CEO George Kurtz said Falcon Flex, the company's flexible licensing program launched a year ago, is resonating with customers:

"Our Falcon Flex subscription model is supercharging Falcon platform adoption. With CrowdStrike, cybersecurity consolidation is rapid and ROI is measurable. Falcon Flex is increasing both our share of wallet and enterprise real-estate, furthering CrowdStrike as cybersecurity' AI-native platform of record.

We closed more than 150 Falcon Flex transactions, with these customers representing more than $600 million in total deal value."

Kurtz added that Falcon Flex has increased the stakeholder conversations with the CFO most interested in the program as part of vendor consolidation efforts.

More CrowdStrike:

• CrowdStrike to Delta: Don't blame us for your IT outage response
• Delta puts numbers on CrowdStrike outage, sets up interesting discovery period
• CrowdStrike outage likely to hit cybersecurity's platformization pitch
• Constellation ShortList™ Cloud Native Application Protection Platforms (CNAPP)
• Cybersecurity platformization: What you need to know

Dell Technologies Q3 server and networking revenue surges in Q3, but PC business lags

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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Dell Technologies reported better-than-expected third quarter results and strong demand for its AI servers, but weak consumer PC sales.

The company reported third quarter net income of $1.127 billion, or $1.58 a share, on revenue of $24.37 billion, up 10% from a year ago. Non-GAAP earnings were $2.15 a share.

Dell was expected to report earnings of $2.06 a share on revenue of $24.72 billion. Leading up to the report, Wall Street analysts were betting that the company would be a big beneficiary of SuperMicro’s accounting issues along with HPE. Dell Technologies has also been moving to create modular bundles for AI factories based on Nvidia, AMD and others.

• Dell Technologies launches Nvidia Blackwell PowerEdge system, new rack design
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• Dell Technologies COO Clarke: Data gravity will drive enterprise genAI infrastructure demand

Jeff Clarke, chief operating officer, said that AI demand is showing “no signs of slowing down” and the company saw AI server orders demand of $3.6 billion in the third quarter. Dell Technologies pipeline in the quarte rwas up 50%. Dell’s infrastructure solutions group had operating income of $1.5 billion on revenue of $11.4 billion, up 34% from a year ago. Servers and networking revenue was up 58% and storage revenue was up 4% in the third quarter.

In prepared remarks, Clarke said:

"We continue to gain traction with Enterprise customers, large and small, with over 2,000 unique Enterprise customers since launch. Increasingly, Enterprises see the disruptive nature and the innovation opportunities with GenAI resulting in growing GenAI experimentation and proof of concepts."

Clarke added that Dell sees "profit pools" to surround AI servers including power management and distribution, cooling systems, networking gear, maintenance and services. 

According to Clarke, enterprises are consolidating data centers for power and efficiency and "freeing up valuable floor space and power that will support their AI infrastructure."

However, Dell said its client solutions group saw third quarter revenue of $12.1 billion, down 1% from a year ago. Commercial PC revenue was up 3% from a year ago to $10.1 billion. Consumer PC revenue fell 18% in the third quarter to $2 billion. Dell's focus is on commercial PC and workstations. 

• PC upgrade cycle to be driven by AI, but calling timing has been difficult

He said enterprises are upgrading PCs, but "lining up their upgrade cycles with new AI PCs in the first half of next year." Clarke said enterprises are balancing their need to refresh while future proofing purchases. 

Consumer demand "continues to be challenged," but expects demand to pickup as Windows 10 nears end of life in 46 weeks.  

"Dell had a good quarter, largely because its data center revenue is now large enough that its growth can compensate for the stagnating client solutions group. The next quarter maybe the inflection point, when data center revenue will pass client solution group," said Constellation Research analyst Holger Mueller. 

Dell CFO Yvonne McGill said IT spending is "dynamic" in that some areas (AI servers) are surging and others (consumer PCs) are lagging. 

Dell projected fourth quarter revenue to be between $24 billion and $25 billion. Infrastructure revenue growth rate will be in the mid-20s range with the PC business revenue growth in the low single digit range. Non-GAAP fourth quarter earnings will be about $2.50 a share give or take 10 cents a share. 

For the year, Dell said revenue is expected to grow about 9% with non-GAAP earnings of $7.81 a share. 

Dell didn't provide an outlook for fiscal 2026, but McGill said:

"We expect multiple tailwinds going into next year, including more robust AI demand supported by our strong five quarter pipeline. There's also an aging install base in both PCs and Traditional servers that are primed for a refresh.

We expect ISG growth to be driven primarily by AI servers followed by Traditional servers and storage. We expect CSG to grow as enterprise customers refresh a large and aging install base."

Workday names Enslin chief commercial officer, reports solid Q3

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 said Rob Enslin, most recently CEO of UiPath, will become president and chief commercial officer. Workday also reported better-than-expected third quarter results.

Enslin will be stepping into a newly created role. Enslin, who is also an alum of Google Cloud and SAP, will be responsible for Workday's revenue growth, sales, partnerships and customer experience. Enslin will join Workday effective Dec. 2. He stepped down at UiPath in May.

Workday reported third quarter earnings of 72 cents a share, non-GAAP earnings of $1.89 a share, and revenue of $2.16 billion, up 15.8% from a year ago. Wall Street was expecting Workday to report third quarter non-GAAP earnings of $1.76 a share on revenue of $2.13 billion.

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CEO Carl Eschenbach said Workday delivered "solid performance" and that "organizations are increasingly consolidating on the Workday platform to reduce total cost of ownership, simplify their operations, and our AI solutions."

As for the outlook, Workday said fourth quarter subscription revenue will be $2.025 billion, up 15% from a year ago. For fiscal 2025, Workday is projecting subscription revenue of $7.703 billion, up 17%.

Speaking on a conference call with analysts, Eschenbach said the company saw growth in most of its geographies and industries, but government and education stood out. He said 90% of wins in the quarter were full suite implementations. 

He added:

"AI is top of mind for every CEO right now, and they're all looking for the right partner to guide them through this transformation. Our customers know that an investment in Workday is an investment in AI, and we're seeing a ton of excitement and demand for our AI solutions. In Q3 alone, more than 30% of our customer expansions involved one or more AI solutions."

Eschenbach said that Workday Illuminate and its AI agents will drive growth going forward. 

Constellation Research's take

Constellation Research analyst Holger Mueller said:

"Workday had a good quarter beating the street on the top and bottom lines. Workday broke the $2 billion quarterly revenue mark – a key milestone, as it is on the way to $10 billion in revenue. The growth and good cost discipline helped Workday to grow 30 cents in EPS year over year. The addition of Rob Enslin should help Workday expanding its customer access, as he brings C-Suite relationships from his time at both SAP and Google. The pressure is on Carl Eschenbach and team is on the go-to-market side. On the product side, Workday will have to get going and make its AI strategy tangible, and show what difference it can make for customers' employees daily."

BT150 Spotlight: Insight Global's DeWayne Griffin on HR, AI and Humans in the Loop

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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DeWayne Griffin, Chief Digital and Information Officer at Insight Global, said artificial intelligence has a big role in human resources, staffing and recruitment, but you will need a human in the loop to assess soft skills and cultural fit.

I caught up with Griffin shortly after Constellation Research's Connected Enterprise conference where it was inducted into the 2025 BT150 class.

Here are the takeaways of my conversation with Griffin.

Multiple views of the business: Griffin leads Insight Global's internal technology organization and joined in June 2023 after a 22-year career at State Farm Insurance, but became familiar with the company as a board member in 2021 to help with digital transformation. Those roles gave Griffin a good view of the business and technology's role in it across multiple touchpoints in the hiring journey.

"Insight Global at its simplest form helps people find jobs. We have to really understand Fortune 1000 hiring needs and then match them with a wide field of candidates," said Griffin. "My job is to power that connection through the use of technology."

The role of data. Griffin said Insight Global is focused on the known data in job candidates and then there's data still exploring. "We are still going through the digitization of various parts of our business to understand insights and meaning to help us deliver our services at a higher level," said Griffin. "Data is the anchor of our business and it starts with our candidate-consultant population. We have about 30,000 consultants who trust us to help put them to work. We have a rich pool of data from understanding that population as well as data from our 20-year history to help match."

Job demand. Insight Global provides staff and professional services and a core part of the business is in the technology sector. "It has been a difficult market over the past few years and the market has contracted," said Griffin. "If there's AI connected to a role, there's high demand. Other roles are data roles and data science roles. Engineering roles are in high demand and so is cybersecurity."

Griffin added that Insight Gobal also has healthcare roles to fill, but the key is finding new roles as they come up. "There are different pockets of new roles and exploration that we're following the market to go after," he said.

Use of AI internally. Griffin said AI has taken over the conversation since he joined the company. "Where AI has made a difference for us is improving the richness of our data sets around candidate and consultants. We have used AI to help matching industry needs for skills against our pool of candidates and available consultants coming off engagements," said Griffin. "We're using AI, not generative AI per se, and machine learning for the predictive modeling. We've differentiated when we're helping align a candidate who has been interviewed and selected for an opportunity. We've modeled risks of competing offers, delays in hiring and behaviors of hiring managers."

Use of AI in the hiring process. Griffin said AI is already involved in the hiring process and Insight Global said there's value add of AI being used in applicant suitability, skills assessment and training. "There's also this nuance that AI has enhanced the confidence of value and efficiency in the hiring process, but it can't replace the human decision making," said Griffin. "We've seen the investments, but now it's about how AI and human decision-making intersects." 

Human in the loop. Griffin said the human in the loop in hiring revolves around the human interaction and behaviors around culture, fit and soft skills. "Hard skills that are on the resumes can be synthesized as can a one-way video interview, but there has to be a human interaction with the recruiter," said Griffin.

The tech stack. Griffin is heavily focused on infrastructure primarily in the cloud with some data centers for core corporate functions. He said Insight Global is modernizing its data estate to be in a position for AI use cases. Global Insights will buy software for common functions, but build for differentiation. "You have to have the ability to buy and build. I think you should buy and build," said Griffin. "If there's something that we think makes us special in how we deliver our services we build those things. Otherwise, we buy world-class software and integrate it with the flow of data."

Advice to college grads. Griffin said recent grads may want to think about contract and temp work. "When we start our careers we want experiences and you can get that through contract work that can get you professional service engagement, scrum teams and other skills," said Griffin. "It's all about staying sharp with your skills--technical and soft skills. What gets lost in this world of digital interactions is soft skills and in-person interactions. Add those soft skills to your repertoire."

2025 plans. "I'm really focusing on the journey of our customers and anticipating processes and the job posture where there is economic uncertainty," said Griffin. "That uncertainty is going to require some agility for us to help meet those core skills in demand. We will be using AI in more advanced ways, take advantage of our cloud services and building out our overall enterprise data strategy. A big part of our innovation agenda is about chasing the growth opportunity."

BT150 interviews:

• BT150 Spotlight: MultiCare Health System's Laurie Wheeler on optimization, change management and healthcare transformation
• BT150 Spotlight: Jewelers Mutual John Kreul on Human-Centric AI, CX, Returns and Future-Proofing
• BT150 member Dr. Jonathan Reichental: How autonomous vehicles could change how cities are designed
• Peraton's Cari Bohley: Why internal talent recruiting and retention is critical
• SuperNova Award interview with Joe Prota: How IBM used Adobe Firefly to speed up ideation and iteration
• BT150's Ashwin Rangan on CIO evolution, technology curves and what it means for genAI deployments
• BT150 Spotlight: Sunitha Ray on the difference between enterprise AI and genAI

Zoom reports strong Q3, adds contact center, Workvivo customers

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. ...

Read more

Zoom Communications reported better-than-expected third quarter results and raised its fourth quarter outlook as the company grew its contact center customer base.

The company reported third quarter net income of $207.1 million, or 66 cents a share, on revenue of $1.177 billion, up 3.6% from a year ago. Non-GAAP earnings were $1.38 a share.

Wall Street was expecting Zoom to report third quarter earnings of $1.31 a share on revenue of $1.16 billion.

Speaking on an earnings conference call, Zoom CEO Eric Yuan said Zoom AI Companion monthly active users grew 59% sequentially. Zoom's Workvivo, which is benefiting from a Meta partnership, saw its customer base jump by 72%.

• Will Meta's Workplace shutdown be a boon for Zoom's Workvivo?
• Zoom launches AI Companion 2.0, eyes enterprise, industry expansion

"Zoom Contact Center set a record with an over 20,000-seat deal in EMEA, and Workvivo secured its largest deal ever with a Fortune 10 company, showing our success in landing and expanding with global enterprises that recognize the promise of our integrated Workplace and Business Services platform," said Yuan.

Yuan added that the number of Zoom Contact Center customers topped 1,250, up 82% from a year ago. "Our Enterprise revenue grew approximately 6% year over year, reflecting a continued shift to Enterprise which now makes up 59% of our total revenue," said Yuan.

Constellation ShortList™ Unified Communications as a Service (UCaaS) | Constellation ShortList™ Contact Center Workforce Engagement Management (WEM)

As for the outlook, Zoom said its fourth quarter revenue will be between $1.175 billion and $1.18 billion with non-GAAP earnings of $1.29 a share to $1.30 a share. For fiscal 2025, Zoom revenue will be between $4.656 billion to $4.661 billion. Non-GAAP earnings for fiscal 2025 will be between $5.41 a share to $5.43 a share.

By the numbers:

• Zoom said it had 3,995 customers contributing $100,000 in trailing 12 month revenue.
• The company reported 192,400 enterprise customers.
• Online churn in the third quarter was 2.7%.
• Non-GAAP gross margin in the third quarter was 78.9%, down from 79.7% a year ago due to investments in AI.
• The company authorized another $1.2 billion to buy back shares. Zoom said it had $2 billion to buy back shares with purchases expected to be complete by the end of fiscal 2026.

Constellation Research's take

Constellation Research analyst Holger Mueller said:

"Zoom continues its transformation from being the synchronous video platform – to an overall communications vendor. And we see why – growth is slow despite the substantial capability growth and widening the total addressable market for Zoom. The problem is the competition and commoditization of the synchronous communication. About 50% of Zoom's growth in net income is fueled more by the doubling of its ‘other income,' which grew from a quarter of operating income a year ago to now 50% of that measure. Zoom is doing the right thing, but it just needs to find ways to grow faster with its new offerings as its core business is being pressured. Next quarter will tell."