Eric Yuan, founder and CEO of Zoom Video Communications Inc., Center, reacts as he rings the opening bell of the company’s IPO on the Nasdaq MarketSite in New York, United States on Thursday, April 18, 2019. Zoom reported net income of $ 7.6 million on sales of $ 331 million for the fiscal year ended January, and is now worth nine times what it was after a financing round two years ago.
Victor J. Blue | Bloomberg | Getty Images
Zoom stock rose up to 11% in expanded trading on Monday after the video calling software maker reported fourth quarter earnings and guidance for the fiscal year that were stronger than analysts expected.
This is how the company did it:
- Merits: According to Refinitiv, $ 1.22 per share, adjusted down from 79 cents per share as analysts expected
- Revenue: According to Refinitiv, $ 882.5 million versus $ 811.8 million as analysts expected
Revenue for the quarter ended Jan. 31 was up 369% year over year, according to a statement. In the same quarter of the previous year, Zoom was used more frequently when the Covid-19 virus appeared in China. This led the World Health Organization to label the virus a pandemic in March 2020. In the previous quarter, sales had increased by 367%.
Zoom increased its gross margin to 69.7% from 66.7% in the previous quarter. This was mainly related to the seasonal audio usage, which fell during the holidays, said finance director Kelly Steckelberg on a Zoom call with analysts.
The company lost fewer customers than executives expected, she said. Still, churn rates remain higher than they did before the pandemic, and Zoom believes the higher churn rates will continue as people travel more, Steckelberg said.
The company also grew with small customers. Zoom said it had 467,100 customers with 10+ employees at the end of the fourth fiscal quarter, up 470% on an annualized basis compared to 354% growth in the previous quarter. The company ended the quarter with $ 4.24 billion in cash and marketable securities, compared with $ 1.87 billion in the previous quarter.
The company is open to buying companies while having more cash. “We just haven’t found the right game yet,” said Steckelberg.
During the fourth fiscal quarter, Zoom announced it had amassed more than 1 million seats for Zoom Phone, a service that allows people to virtually place and receive calls, route calls, and take voicemail.
In terms of projections, Zoom sees adjusted earnings per share of 95 to 97 cents for the first quarter of the fiscal year on revenue of $ 900 to $ 905 million, which would mean mid-range revenue growth of 175%. Analysts polled by Refinitiv had expected adjusted earnings per share of 72 cents on sales of $ 829.2 million.
For the full 2022 fiscal year, Zoom called for adjusted earnings of $ 3.59 to $ 3.65 per share and revenue of $ 3.76 to $ 3.78 billion, a growth of 42%. Analysts surveyed by Refinitiv had targeted adjusted earnings per share of $ 2.96 and revenue of $ 3.56 billion.
About half of the business is billed monthly, up from 40% last year, said Steckelberg.
Excluding the after-business move, Zoom stock is up 22% year-to-date, while the S&P 500 is up less than 4% over the same period.
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