Customer growth helps Zoom surpass revenue expectations

Customer growth helps Zoom surpass revenue expectations

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Shares in Zoom Video Communications Inc. rose slightly in after-hours trading today after the online communications company beat expectations in its fiscal third quarter.

For the quarter that ended Oct. 31, Zoom reported adjusted net income of $401.2 million, or $1.29 per share, up from $332.2 million, or $1.07 per share, in the same quarter of last year. Revenue rose 3% from a year ago, to $1.137 billion. Analysts had expected adjusted earnings of $1.09 per share on revenue of $1.12 billion.

Zoom saw net cash flow from operating activities in the quarter rise 67%, to $493.2 million. The company had $6.5 billion in cash, cash equivalents and marketable securities on hand as of the end of the quarter.

The better-than-expected figures were driven by customer growth, with Zoom having about 219,700 enterprise customers as of the end of the quarter, up 5% year-over-year, with a trailing-12-month net dollar expansion rate for enterprise customers of 105%. Some 3,731 Zoom customers contributed more than $100,000 in trailing 12 months revenue, up 13.5%.

Customers are also sticking around, with Zoom experiencing an average online customer monthly churn rate of 3% in its third quarter, down a percentage point from the same quarter last year. Total monthly recurring revenue from online customers — the consistent revenue generated each month from customers that use Zoom’s online services with a continual term of service of at least 16 months — was 73.2%, up 25 percentage points year-over-year.

Business highlights in the quarter included Zoom launching an artificial intelligence companion and the Zoom Revenue Accelerator in September. The Zoom AI companion, as the name suggests, provides assistance for users and the Revenue Accelerator includes AI features, such as meeting summaries, chapter summaries, sentiment, engagement, talk/listen ratio and next steps/good questions.

In October, Zoom launched a host of generative AI-based enhancements to its core platform and enhancements to the contact center offering it launched early last year and the Workvivo Ltd. employee engagement application it acquired in April.

“In Q3, revenue came in ahead of guidance as we bolstered Zoom’s all-in-one intelligent collaboration platform with advanced new capabilities like Zoom AI Companion and continued to evolve our customer and employee engagement solutions,” Eric S. Yuan, founder and chief executive of Zoom, said in the company’s earnings release. “We are also pleased with our online business, where we drove higher retention and saw usage of our new AI capabilities, enhancing the value of our platform.”

For its fiscal fourth quarter, Zoom expects adjusted earnings per share of $1.13 to $1.15 on revenue of $1.125 billion to $1.13 billion. Analysts were expecting $1.09 per share and revenue of $1.13 billion. For its full fiscal year 2024, the company expects adjusted earnings of $4.93 to $4.95 per share on revenue of $4.506 billion to $4.511 billion.

Photo: Zoom

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