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Zoom revenue surges 191%, even as COVID-19 eases grip

·Technology Editor
·3 min read
In this article:
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Zoom (ZM) reported its fiscal Q1 2022 earnings after the closing bell on Tuesday, beating analysts' expectations on the top and bottom line with revenue soaring 191% year-over-year.

The video conferencing company saw stratospheric growth during the pandemic, and investors are closely watching its performance in the coming quarters as the pandemic wanes and people begin meeting more in person.

Here are the most important numbers from the report compared with what analysts were expecting as compiled by Bloomberg.

  • Revenue: $956 million versus $910.2 million expected

  • Earnings per share: $1.32 versus $0.99 expected

The company's stock was down about 3% after the announcement. There are signs that growth is beginning to slow for the company, with Q4 year-over-year growth coming in at 369%, far higher than Q1.

"We kicked off the fiscal year with a very strong first quarter, posting 191% total year-over-year revenue growth combined with strong profitability and cash flow," CEO Eric Yuan said in a statement. "Our steadfast commitment to empowering customers to work and learn from anywhere with our expansive, innovative, and frictionless video communications platform continued to drive our results."

Zoom was emblematic of the way our lives changed during the pandemic, as people turned to video chat to stay in touch for everything from virtual happy hours to birthdays and weddings. Zooming became a frequent activity for people looking to, at least temporarily, feel as though they weren’t trapped indoors.

While consumer revenue certainly benefited Zoom, it’s the companies that have more than 10 employees and those that pay more than $100,000 in the trailing 12 months that are worth looking at, as they serve as the firm’s main revenue sources.

With cities and states in the U.S. reopening as more of the population is vaccinated, and countries around the world starting to open up to travelers, the level of growth Zoom has experienced will be on the minds of many investors.

It’s difficult to frame Q1 2022 against Q1 2021, since the pandemic didn’t kick into high gear, at least in the U.S., until March 2020. But Zoom’s Q2 2022 guidance could offer a look at how well the company expects to perform going forward versus the early portion of the pandemic.

In its report, Zoom said it expects to see Q2 revenue between $985 million and $990 million, beating analysts' expectations of $941 million. Earnings per share are all expected to come in higher than expectations of $0.94, at $1.14 to $1.15.

It’s going to be difficult to top the kind of growth Zoom saw throughout 2020. Revenue in fiscal Q3 2021, for instance, jumped an incredible 367% year-over-year. Investors and analysts will also be looking at churn, or the number of subscribers who have left Zoom in the last few weeks of the quarter as vaccines became more readily available.

Zoom has been particularly sensitive to pandemic news, with the company’s stock falling from $500.11 on Nov. 6 2020 to $376.01 Nov. 10 when Pfizer and BioNtech announced that their vaccine was more than 90% effective.

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