Zoom Communications Inc., (ZM) the worlds most popular video teleconferencing company, released its third-quarter earnings after the market closed on Monday.
- Revenue: $1.058 billion vs $1.02 billion
- EPS: $1.11 vs $1.02 expected
Earnings Highlights
- Revenue: Total revenue for the third quarter was $1,050.8 million, up 35% year over year.
- Income from Operations and Operating Margin: GAAP income from operations for the third quarter was $290.9 million, up from $192.2 million in the third quarter of fiscal year 2021. After adjusting for stock-based compensation expense and related payroll taxes, and acquisition-related expenses, non-GAAP income from operations for the third quarter was $411.3 million, up from $290.8 million in the third quarter of fiscal year 2021. For the third quarter, GAAP operating margin was 27.7% and non-GAAP operating margin was 39.1%.
- Net Income and Diluted Net Income Per Share: GAAP net income attributable to common stockholders for the third quarter was $340.3 million, or $1.11 per share, up from $198.4 million, or $0.66 per share in the third quarter of fiscal year 2021.
Non-GAAP net income for the third quarter was $338.4 million, after adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, gains on strategic investments, net, and undistributed earnings attributable to participating securities. Non-GAAP net income per share was $1.11. In the third quarter of fiscal year 2021, non-GAAP net income was $297.2 million, or $0.99 per share. - Cash and Marketable Securities: Total cash, cash equivalents, and marketable securities, excluding restricted cash, as of October 31, 2021 was $5.4 billion.
- Cash Flow: Net cash provided by operating activities was $394.6 million for the third quarter, compared to $411.5 million in the third quarter of fiscal year 2021. Free cash flow, which is net cash provided by operating activities less purchases of property and equipment, was $374.8 million, compared to $388.2 million in the third quarter of fiscal year 2021.
CEOs Statement
“In Q3, we held our premier user event, Zoomtopia, on our Zoom Events service. During this immersive, multi-track conference, we showcased how Zoom is placing people at the center of our communications platform, connecting their disparate work streams into our technology, moving beyond enterprises’ ability to collaborate internally, and empowering them to communicate face-to-face with their customers through Zoom Events and our upcoming Video Engagement Center. We also showcased innovations such as hot desking, whiteboarding, and smart gallery, all designed to empower both co-located and remote hybrid workforces as some companies test return to office programs,”
Eric S. Yuan, Zoom founder and CEO
“Through innovation and dedication, we will continue to deliver happiness to our customers. Looking forward, we expect to close the year between $4.079 to $4.081 billion in total revenue, representing approximately 54% year-over-year growth, alongside strong profitability and operating cash flow growth. 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. We believe our global brand, innovative technologies, and large customer base position us well for the future.”
Customer Metrics:
At the end of the third quarter of fiscal year 2022, Zoom had:
- 2,507 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 94% from the same quarter last fiscal year.
- Approximately 512,100 customers with more than 10 employees, up approximately 18% from the same quarter last fiscal year.
- A trailing 12-month net dollar expansion rate in customers with more than 10 employees above 130% for the 14th consecutive quarter.
Financial Outlook:
- Fourth Quarter Fiscal Year 2022: Total revenue is expected to be between $1.051 billion and $1.053 billion and non-GAAP income from operations is expected to be between $361.0 million and $363.0 million. Non-GAAP diluted EPS is expected to be between $1.06 and $1.07 with approximately 307 million non-GAAP weighted average shares outstanding.
- Full Fiscal Year 2022: Total revenue is expected to be between $4.079 billion and $4.081 billion. Non-GAAP income from operations is expected to be between $1.598 billion and $1.600 billion. Non-GAAP diluted EPS is expected to be between $4.84 and $4.85 with approximately 306 million non-GAAP weighted average shares outstanding.
Analysts estimates
Analysts had estimated the company’s earnings to stand at $1.09 per share while the revenue was estimated to be $1.02 billion for this quarter.
Earnings History
Zoom Communications Inc. Had broken the estimates consecutively before this quarter, and the analysts expected something similar. In the previous quarter, the earning was estimated to be $1.16 per share. However, with a surprise of 17.20%, the actual earnings came out at $1.36 per share. In the third quarter for FY2020, the EPS was $0.99.
Earnings Forecast
For the next quarter, that is, the fourth quarter of Zoom Communications (ZM), the analysts have estimated the earnings to stand at $1.05 per share while the revenue is expected to be $1.02 billion.
As of 3:51 PM EST, Zoom stock (ZM) traded at $244.14, down 7.17 points (-2.85%).
