Investors have worried over the outlook for growth at Zoom.
Courtesy of Zoom
Zoom Video Communications shares briefly surged, but then faded, as the videoconferencing company posted financial results that edged past the numbers it had told investors to expect, and as management inched up its forecast for the full fiscal year.
Zoom shares (ticker: ZM) have been under pressure since the company’s latest earnings report as investors have worried over slowing growth. Demand for Zoom’s services took off during the pandemic, so the company now faces tough comparisons. The question now will be whether the quarterly results were strong enough to at least temporarily address that concern.
For its fiscal third quarter, ended Oct. 31, Zoom posted revenue of $1.05 billion, up 35% from a year earlier, and above the company’s forecast of $1.02 billion. Both GAAP and non-GAAP profits in the quarter were $1.11 a share, likewise a little above the forecast for a non-GAAP result of $1.07 to $1.08 a share. The Wall Street consensus had called for $1.02 billion in revenue and profits of $1.09 a share.
Zoom shares in late trading gained about 4%, to $252.16, basically offsetting a lost of 3.6% in the day’s regular session, before slipping to negative 6% relative to the closing price.
“We are well on our way to becoming an indispensable platform for enterprises, individuals, and developers to connect, collaborate, and build in the flexible hybrid world of work,” CEO Eric Yuan said in a statement. “We believe our global brand, innovative technologies, and large customer base position us well for the future.”
For the January quarter, Zoom is projecting revenue of $1.051 billion to $1.053 billion, with profits on a non-GAAP basis of $1.06 to $1.07 a share. Street consensus estimates had called for $1.02 billion and $1.05 a share.
For the full fiscal year ending in January 2022, the company now sees revenue of between $4.079 billion and $4.081 billion, with non-GAAP profits of $4,84 to $4.85 a share. Previously, the company had projected revenue of $4.01 billion to $4.02 billion, with profits of $4.75 to $4.79 a share.
Zoom said it had 2,507 customers with trailing 12-months revenue of more than $100,000, up 94% from a year earlier. The company had 512,100 customers with more than 10 employees, up 18% over the same span.
In remarks prepared for the company’s post earnings conference call with analysts, Zoom CFO Kelly Steckelberg said the company saw “strong demand” in the October quarter for the company’s Zoom Phone service, with triple-digit growth in revenue, and 30 customers with more than 10,000 paid seats. She also said non-GAAP gross margin increased to 76% in the quarter, from 68.2% a year ago.
In a research note responding to this afternoon’s report, Citi analyst Tyler Radke writes that the January quarter guidance was “better than feared,” though he notes as well that the company still faces “rapidly slowing growth.” Radke maintains his Neutral rating and $304 price target on the stock.
Write to Eric J. Savitz at [email protected]
