Zoom founder Eric Yuan delivered a speech prior to the Nasdaq opening bell ceremony in New York on April 18, 2019.
Kena Betancur | Getty Images
Zoom
shares surged by 8% in after-hours trading on Monday after the video-calling software provider revealed its fiscal second-quarter results that surpassed analysts’ expectations.
Here’s a breakdown of the company’s performance:
- Earnings: $1.34 per share (adjusted), exceeding analysts’ expected $1.05 per share, according to Refinitiv.
- Revenue: $1.14 billion, surpassing analysts’ expected $1.12 billion, according to Refinitiv.
Zoom reported a 3.6% year-over-year revenue growth in the quarter ending on July 31, as stated in a press release. The company’s net income for the quarter was $182 million, or 59 cents per share, compared to $45.7 million, or 15 cents per share, in the same quarter last year.
However, Zoom’s growth rate has slowed down since two years ago when revenue multiplied almost by five due to the surge in demand caused by the Covid pandemic, which led companies and schools to subscribe to premium accounts for remote collaboration.
As of the end of July, Zoom had approximately 218,100 enterprise customers, representing a 1% increase from April 30. Enterprise clients are defined as business units working with Zoom’s direct sales teams, resellers, or partners.
Although Zoom’s quarterly guidance fell slightly short, executives raised the company’s full-year forecast. They now anticipate adjusted earnings per share of $4.63 to $4.67 and revenue between $4.485 billion to $4.495 billion for the full 2024 fiscal year. This implies 2% growth at the midpoint of the revenue range. Three months ago, Zoom had projected adjusted earnings per share of $4.25 to $4.31 and revenue between $4.465 billion to $4.485 billion. Analysts polled by Refinitiv had predicted adjusted earnings per share of $4.30 and revenue of $4.49 billion for Zoom.
“Our increased total revenue guidance reflects a consistent view on enterprise, with tempered expectations for online for the remainder of the year,” said Kelly Steckelberg, Zoom’s finance chief, during a conference call with analysts. She also noted that sales cycles are currently longer than usual as clients conduct thorough due diligence.
Zoom is focusing on optimizing its spending, including on cloud services, while also slowing down the growth of sales and marketing expenses. In addition, the company introduced new features such as call summaries available to certain customers through free trials and invested in the artificial intelligence startup Anthropic.
Eric Yuan, Zoom’s founder and CEO, stated that unlike its competitors, the company will not charge an exorbitant price for artificial intelligence features on top of its existing software. Instead, Zoom plans to integrate AI capabilities into its current software services.
Zoom’s contact center software for customer service is experiencing rapid growth, with over 500 customers currently using it, according to Steckelberg. This expansion comes after Zoom’s failed attempt to acquire Five9. Steckelberg noted that the price of the contact center software was highly disruptive.
Despite the after-hours surge, Zoom stock has declined by about 1% this year, while the S&P 500 index has risen by 15% during the same period.
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