Zoom Video Communications Inc.’s stock rose in extended trading Monday, after the videoconferencing company beat expectations across the board with its financial results and forecasts.
Zoom
ZM,
reported fiscal first-quarter net income of $15.4 million, or 5 cents a share, on revenue of $1.11 billion, up from $1.07 billion a year ago. After adjusting for stock compensation and other effects, Zoom reported earnings of $1.16 a share, up from $1.03 a share last year and topping analysts’ expectations. Analysts surveyed by FactSet had on average expected adjusted net income of 99 cents a share on revenue of $1.08 billion.
Zoom executives said they expect second-quarter adjusted earnings of $1.04 to $1.06 a share on revenue of $1.11 billion to $1.12 billion, while analysts on average were projecting $1.05 a share on sales of $1.11 billion, according to FactSet. For the full year, Zoom executives predicted adjusted earnings of $4.25 to $4.31 a share on revenue of $4.47 billion to $4.49 billion, while analysts on average were expecting $4.21 a share on sales of $4.45 billion.
“The solid start to the year has enabled us to raise our outlook for fiscal-year 2024 while continuing to invest in innovations such as AI to help make interactions more meaningful and communications more effective,” Zoom Chief Executive Eric Yuan said in a statement announcing the results. He later added in a video meeting with analysts that Zoom has been investing in AI for a few years.
AI tools could be added over video to enhance services at law firms and health care, Yuan said.
Zoom Chief Financial Officer Kelly Steckelberg said in the same call late Monday that enterprise customers eclipsed 200,000 during the quarter, accounting for 29% of total revenue, as Zoom added customers in health care, education and the government.
The results underscore the inherent risk/reward for services such as Zoom as more Americans return to work after teleconferencing became the norm early in the COVID-19 pandemic. Rosenblatt Securities analysts warned that this was a “a big renewal quarter for the company, with COVID contracts coming up,” and said their checks had returned mixed results.
“Our proprietary fieldwork indicates the company’s competitive position is steady, but only with substantial discounts and free services added,” the analysts wrote, while pointing out strong competition from larger companies such as Microsoft Corp.
MSFT,
which offers Teams as a competitor, and Cisco Systems Inc.’s
CSCO,
WebEx offering.
Shares of Zoom popped more than 5% in after-hours trading immediately following the release of the results Monday, but ended the extended session up just 1.2%. Zoom’s stock has climbed 5% this year, while the broader S&P 500 index
SPX,
has jumped 9%.
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