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Zoom Reports First Quarter Results for Fiscal Year 2021

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  • First quarter total revenue of $328.2 million, up 169% year-over-year

  • Number of customers contributing more than $100,000 in TTM revenue up 90% year-over-year

  • Approximately 265,400 customers with more than 10 employees, up 354% year-over-year

SAN JOSE, Calif., June 02, 2020 (GLOBE NEWSWIRE) -- Zoom Video Communications, Inc. (ZM), a provider of video-first unified communications, today announced financial results for the quarter ended April 30, 2020.

“We were humbled by the accelerated adoption of the Zoom platform around the globe in Q1. The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives,” said Eric S. Yuan, Founder and Chief Executive Officer of Zoom. “I am proud of our Zoom employees who dedicated themselves to support customers and the global community during this crisis. With their tremendous efforts, we were able to provide high-quality video services to new and existing customers.

Yuan added, "We also supported an unprecedented number of free participants, including over 100,000 K-12 schools around the globe that chose Zoom to deliver the best online education experience. This quarter, we were also proud to launch Zoom Cares, our corporate philanthropic entity, with initial grants to San Jose Digital Inclusion Fund, Destination Home, the CDC Foundation, the World Health Organization and the CDE Foundation. While the key long-term focuses of this foundation are education, climate change, and social equity, our primary grants in Q1 were toward organizations making a difference during COVID-19.”

First Quarter Fiscal Year 2021 Financial Highlights:

  • Revenue: Total revenue for the quarter was $328.2 million, up 169% year-over-year.

  • Income from Operations and Operating Margin: GAAP income from operations for the quarter was $23.4 million, compared to GAAP income from operations of $1.6 million in the first quarter of fiscal year 2020. After adjusting for stock-based compensation expense and related payroll taxes and expenses related to charitable donation of common stock, non-GAAP income from operations for the first quarter was $54.6 million, up from $8.2 million in the first quarter of fiscal year 2020. For the first quarter, GAAP operating margin was 7.1% and non-GAAP operating margin was 16.6%.

  • Net Income and Net Income Per Share: GAAP net income attributable to common stockholders for the quarter was $27.0 million, or $0.09 per share, compared to GAAP net income attributable to common stockholders of $0.2 million, or $0.00 per share in the first quarter of fiscal year 2020.

    Non-GAAP net income for the quarter was $58.3 million, after adjusting for stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, and undistributed earnings attributable to participating securities. Non-GAAP net income per share was $0.20. In the first quarter of fiscal year 2020, non-GAAP net income was $8.9 million, or $0.03 per share. The non-GAAP weighted average share count for the first quarter of fiscal year 2020 has been adjusted to reflect the shares of Class A common stock issued in connection with the Initial Public Offering (“IPO”), including the concurrent private placement, that are outstanding as of the end of the period as if they were outstanding as of the beginning of the period for comparability.

  • Cash: Total cash, cash equivalents, and marketable securities as of April 30, 2020 was $1.1 billion.

  • Cash Flow: Net cash provided by operating activities was $259.0 million for the quarter, compared to $22.2 million in the first quarter of fiscal year 2020. Free cash flow was $251.7 million, compared to $15.3 million in the first quarter of fiscal year 2020.

Customer Metrics: Drivers of total revenue include acquiring new customers and expanding across existing customers. At the end of the first quarter of fiscal year 2021, Zoom had:

  • Approximately 265,400 customers with more than 10 employees, up approximately 354% from the same quarter last fiscal year.

  • 769 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 90% 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 8th consecutive quarter.

Financial Outlook: Zoom is providing the following guidance for its second quarter fiscal year 2021 and its full fiscal year 2021.

  • Second Quarter Fiscal Year 2021: Total revenue is expected to be between $495.0 million and $500.0 million and non-GAAP income from operations is expected to be between $130.0 million and $135.0 million. Non-GAAP diluted EPS is expected to be between $0.44 and $0.46 with approximately 299 million non-GAAP weighted average shares outstanding.

  • Full Fiscal Year 2021: Total revenue is expected to be between $1.775 billion and $1.800 billion. This revenue outlook takes into consideration the demand for remote work solutions for businesses. It also assumed increased churn in the second half of the fiscal year when compared to historic churn levels due to a higher percentage of customers who purchased monthly subscriptions in the first quarter. Non-GAAP income from operations is expected to be between $355.0 million and $380.0 million. Non-GAAP diluted EPS is expected to be between $1.21 and $1.29 with approximately 300 million non-GAAP weighted average shares outstanding.

Additional information on Zoom's reported results, including a reconciliation of the non-GAAP results to their most comparable GAAP measures, is included in the financial tables below. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future.

A supplemental financial presentation and other information can be accessed through Zoom’s investor relations website at investors.zoom.us.

Zoom Video Earnings Call

Zoom will host a Zoom Video Webinar for investors on June 2, 2020 at 2:30p.m. Pacific Time / 5:30 p.m. Eastern Time to discuss the company’s financial results and business highlights. Investors are invited to join the Zoom Video Webinar by visiting: https://investors.zoom.us/

About Zoom

Zoom Video Communications, Inc. (ZM) brings teams together to get more done in a frictionless and secure video environment. Our easy, reliable, and innovative video-first unified communications platform provides video meetings, voice, webinars, and chat across desktops, phones, mobile devices, and conference room systems. Zoom helps enterprises create elevated experiences with leading business app integrations and developer tools to create customized workflows. Founded in 2011, Zoom is headquartered in San Jose, California, with offices around the world. Visit zoom.com and follow @zoom_us.

Forward-Looking Statements

This press release contains express and implied “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “target,” “explore,” “continue,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These statements may relate to our market size and growth strategy, our estimated and projected costs, margins, revenue, expenditures and growth rates, our financial outlook, including our guidance for the second quarter fiscal year 2021 and full fiscal year 2021, our plans and objectives for future operations, growth, initiatives, or strategies. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the statements. These assumptions, uncertainties and risks include that, among others, our business, financial results and prospects would be harmed by any decline in new customers and hosts, renewals or upgrades, our limited operating history makes it difficult to evaluate our prospects and future results of operations, we operate in competitive markets, we do not expect to sustain our revenue growth rate in the future, there is continued uncertainty regarding the extent and duration of the impact of COVID-19 and the responses of government and private industry thereto, as well as the impact of COVID-19 on the overall economic environment, any or all of which will have an impact on demand for remote work solutions for businesses as well as overall distributed, face-to-face interactions and collaboration using Zoom, our business would be harmed by any significant interruptions, delays or outages in services from our co-located data centers, and failures in internet infrastructure or interference with broadband access could cause current or potential users to believe that our systems are unreliable. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” and elsewhere in our most recent filings with the Securities and Exchange Commission (the “SEC”), including our annual report on Form 10-K for the year ended January 31, 2020. Forward-looking statements speak only as of the date the statements are made and are based on information available to Zoom at the time those statements are made and/or management's good faith belief as of that time with respect to future events. Zoom assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.

Non-GAAP Financial Measures

Zoom has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Zoom uses these non-GAAP financial measures internally in analyzing its financial results and believes that use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Zoom’s financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with Zoom’s condensed consolidated financial statements prepared in accordance with GAAP. A reconciliation of Zoom’s historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

Non-GAAP Income From Operations and Non-GAAP Operating Margins. Zoom defines non-GAAP income from operations as income from operations excluding stock-based compensation expense and related payroll taxes and expenses related to charitable donation of common stock. Zoom excludes stock-based compensation expense and expenses related to charitable donation of common stock because they are non-cash in nature and excluding these expenses provides meaningful supplemental information regarding Zoom’s operational performance and allows investors the ability to make more meaningful comparisons between Zoom’s operating results and those of other companies. Zoom excludes the amount of employer payroll taxes related to employee stock plans, which is a cash expense, because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, this expense is dependent on the price of our common stock and other factors that are beyond our control and do not correlate to the operation of the business.

Non-GAAP Net Income and Non-GAAP Net Income Per Share, Basic and Diluted. Zoom defines non-GAAP net income and non-GAAP net income per share, basic and diluted, as GAAP net income attributable to common stockholders and GAAP net income per share attributable to common stockholders, basic and diluted, respectively, adjusted to exclude stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, and undistributed earnings attributable to participating securities. Zoom excludes undistributed earnings attributable to participating securities because they are considered by management to be outside of Zoom’s core operating results, and excluding them provides investors and management with greater visibility to the underlying performance of Zoom’s business operations, facilitates comparison of its results with other periods and may also facilitate comparison with the results of other companies in the industry.

In order to calculate non-GAAP net income per share, basic and diluted, Zoom uses a non-GAAP weighted-average share count. Zoom defines non-GAAP weighted-average shares used to compute non-GAAP net income per share, basic and diluted, as GAAP weighted average shares used to compute net income per share attributable to common stockholders, basic and diluted, adjusted to reflect the common stock issued in connection with the IPO, including the concurrent private placement, that are outstanding as of the end of the period as if they were outstanding as of the beginning of the period for comparability.

Free Cash Flow. Zoom defines free cash flow as GAAP net cash provided by operating activities less purchases of property and equipment. Zoom considers free cash flow to be a liquidity measure that provides useful information to management and investors regarding net cash provided by operating activities and cash used for investments in property and equipment required to maintain and grow the business.

Customer Metrics

Zoom defines a customer as a separate and distinct buying entity, which can be a single paid host or an organization of any size (including a distinct unit of an organization) that has multiple paid hosts.

Zoom calculates net dollar expansion rate as of a period end by starting with the annual recurring revenue (“ARR”) from all customers with more than 10 employees as of 12 months prior (“Prior Period ARR”). Zoom defines ARR as the annualized revenue run rate of subscription agreements from all customers at a point in time. We then calculate the ARR from these customers as of the current period end (“Current Period ARR”), which includes any upsells, contraction, and attrition. Zoom divides the Current Period ARR by the Prior Period ARR to arrive at the net dollar expansion rate. For the trailing 12 months calculation, Zoom takes an average of the net dollar expansion rate over the trailing 12 months.

Press Relations

Colleen Rodriguez
Global Media Relations Lead for Zoom
press@zoom.us

Investor Relations

Tom McCallum
Head of Investor Relations for Zoom
investors@zoom.us


Zoom Video Communications, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)

As of

April 30,
2020

January 31,
2020

Assets

Current assets:

Cash and cash equivalents

$

488,653

$

283,134

Marketable securities

616,714

572,060

Accounts receivable, net

257,512

120,435

Deferred contract acquisition costs, current

84,054

44,885

Prepaid expenses and other current assets

336,024

75,008

Total current assets

1,782,957

1,095,522

Deferred contract acquisition costs, noncurrent

115,643

46,245

Property and equipment, net

60,479

57,138

Operating lease right-of-use assets

65,316

68,608

Other assets, noncurrent

43,314

22,332

Total assets

$

2,067,709

$

1,289,845

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

3,472

$

1,596

Accrued expenses and other current liabilities

507,010

122,692

Deferred revenue, current

523,246

209,542

Total current liabilities

1,033,728

333,830

Deferred revenue, noncurrent

28,596

20,994

Operating lease liabilities, noncurrent

62,989

64,792

Other liabilities, noncurrent

40,765

36,286

Total liabilities

1,166,078

455,902

Stockholders’ equity:

Preferred stock

Common stock

280

277

Additional paid-in capital

872,237

832,705

Accumulated other comprehensive income

1,887

809

Retained earnings

27,227

152

Total stockholders’ equity

901,631

833,943

Total liabilities and stockholders’ equity

$

2,067,709

$

1,289,845

Note: The amount of unbilled accounts receivable included within accounts receivable, net on the condensed consolidated balance sheets was $19.6 million and $12.5 million as of April 30, 2020 and January 31, 2020, respectively.



Zoom Video Communications, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share and per share amounts)

Three Months Ended April 30,

2020

2019

Revenue

$

328,167

$

121,988

Cost of revenue

103,707

24,104

Gross profit

224,460

97,884

Operating expenses:

Research and development

26,389

13,783

Sales and marketing

121,556

64,041

General and administrative

53,130

18,503

Total operating expenses

201,075

96,327

Income from operations

23,385

1,557

Interest income and other, net

5,790

973

Net income before provision for income taxes

29,175

2,530

Provision for income taxes

2,100

316

Net income

27,075

2,214

Undistributed earnings attributable to participating securities

(39

)

(2,016

)

Net income attributable to common stockholders

$

27,036

$

198

Net income per share attributable to common stockholders:

Basic

$

0.10

$

0.00

Diluted

$

0.09

$

0.00

Weighted-average shares used in computing net income per share attributable to common stockholders:

Basic

279,891,111

109,708,898

Diluted

295,184,958

136,428,379



Zoom Video Communications, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)

Three Months Ended April 30,

2020

2019

Cash flows from operating activities:

Net income

$

27,075

$

2,214

Adjustments to reconcile net income to net cash provided by operating activities:

Stock-based compensation expense

28,777

6,662

Amortization of deferred contract acquisition costs

16,287

7,419

Depreciation and amortization

5,339

3,324

Provision for accounts receivable allowances

3,868

828

Non-cash operating lease cost

2,248

1,533

Charitable donation of common stock

1,000

Remeasurement gain on equity investment

(2,538

)

Other

1,117

257

Changes in operating assets and liabilities:

Accounts receivable

(142,501

)

(16,103

)

Prepaid expenses and other assets

(49,080

)

(8,617

)

Deferred contract acquisition costs

(124,854

)

(14,434

)

Accounts payable

1,756

4,373

Accrued expenses and other liabilities

167,322

12,223

Deferred revenue

322,862

23,557

Operating lease liabilities, net

287

(1,000

)

Net cash provided by operating activities

258,965

22,236

Cash flows from investing activities:

Purchases of marketable securities

(207,546

)

(23,312

)

Maturities of marketable securities

137,014

28,890

Sales of marketable securities

26,613

Purchases of property and equipment

(7,272

)

(6,897

)

Purchase of equity investment

(8,000

)

Purchase of convertible promissory note

(5,000

)

Collections of employee loans

1,319

Purchase of intangible assets

(162

)

Net cash used in investing activities

(63,034

)

(1,319

)

Cash flows from financing activities:

Proceeds from international employee stock sales to be remitted to employees and tax authorities, net

218,540

Proceeds from exercise of stock options, net of repurchases

9,586

1,781

Proceeds from initial public offering and private placement, net of underwriting discounts and commissions and other offering costs

543,471

Net cash provided by financing activities

228,126

545,252

Net increase in cash, cash equivalents, and restricted cash

424,057

566,169

Cash, cash equivalents, and restricted cash – beginning of period

334,082

65,968

Cash, cash equivalents, and restricted cash – end of period

$

758,139

$

632,137



Zoom Video Communications, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited, in thousands, except share and per share amounts)

Three Months Ended April 30,

2020

2019

GAAP income from operations

$

23,385

$

1,557

Add:

Stock-based compensation expense and related payroll taxes

30,246

6,662

Charitable donation of common stock

1,000

Non-GAAP income from operations

$

54,631

$

8,219

GAAP net income attributable to common stockholders

$

27,036

$

198

Add:

Stock-based compensation expense and related payroll taxes

30,246

6,662

Charitable donation of common stock

1,000

Undistributed earnings attributable to participating securities

39

2,016

Non-GAAP net income

$

58,321

$

8,876

Net income per share - basic and diluted:

GAAP net income per share - basic

$

0.10

$

0.00

GAAP net income per share - diluted

$

0.09

$

0.00

Non-GAAP net income per share - basic

$

0.21

$

0.03

Non-GAAP net income per share - diluted

$

0.20

$

0.03

GAAP weighted-average shares used to compute net income per share - basic

279,891,111

109,708,898

Add:

Non-GAAP unweighted adjustment for common stock issued in connection with IPO

153,728,601

Non-GAAP weighted-average shares used to compute net income per share - basic

279,891,111

263,437,499

GAAP weighted-average shares used to compute net income per share - diluted

295,184,958

136,428,379

Add:

Non-GAAP unweighted adjustment for common stock issued in connection with IPO

153,728,601

Non-GAAP weighted-average shares used to compute net income per share - diluted

295,184,958

290,156,980

Net cash provided by operating activities

$

258,965

$

22,236

Less:

Purchases of property and equipment

(7,272

)

(6,897

)

Free cash flow (non-GAAP)

$

251,693

$

15,339

Net cash used in investing activities

$

(63,034

)

$

(1,319

)

Net cash provided by financing activities

$

228,126

$

545,252