Zoom Reports Good Fourth-quarter Earnings, Issues Weak Guidance For First Quarter And Fiscal Full Year

Communications technology company Zoom reported an impressive report for its fourth quarter. The company’s shares plunged as much as 13 percent in extended trading before it made a rebound. The company also issued its guidance for the first quarter and fiscal full year and they fell short of the expectations of analysts.

In the fourth quarter, the company reported earnings of $1.29 per share, adjusted, surpassing the estimates of $1.06 that analysts forecasted, according to Refinitiv. Revenue for the quarter stood at $1.07 billion compared to $1.05 billion that analysts projected, according to Refinitiv.

Zoom’s revenue grew 21 percent year-on-year from the period ended on January 31st. According to a statement it released, it saw a 35 percent growth from the previous quarter. The company also reported that it had 509,800 customers with more than 10 employees as of the end of January. The figure is down from 512,100 which it reported in October. Zoom will stop reporting the number of customers it had in a quarter starting from this quarter and will only be available through the end of the year in its investor deck.

While on a video call with analyst, Zoom’s Chief Finance Officer Kelly Steckelberg said that “What’s happened over time as we see this tremendous growth in online as a channel, it started to kind of overlap there, which is why we don’t think it’s really the appropriate metric to use any longer going forward”.

Moving forward, Zoom will only provide the number of enterprise customers and the nest expansion rate among those clients which will reflect how much these category of customers are increasing their spending. The company revealed that it had 191,000 enterprise customers; this figure is up 35 percent year-on-year. Net dollar expansion rate was disclosed at 130 percent.

While still on the call, the finance chief said that its enterprise business should grow about 20 percent year-over-year in the current fiscal year and expects the online business to decline. She said that smaller customers have the tendency to leave and come back.

In the fourth quarter, Zoom’s net income soared to $490.5 million as gross margin increased from 74.2 percent to 76 percent.

For guidance, Zoom’s projection falls short of analysts’ expectations. It predicts sales to be in the range of $1.07 billion to $1.075 billion in the first quarter, which will be a growth of about 12 percent. Analysts expect this to be $1.1 billion, according to Refinitiv. For the fiscal year, the company projects $4.53 billion to $4.55 billion in revenue, which will mean a growth of 10.7 percent. According to Refinitiv, analysts expected a bigger figure of 44.71 billion.

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