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Zoom Video (ZM) Q4 Earnings Beat Estimates, Revenues Up Y/Y

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·4 min read
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Zoom Video Communications ZM reported fourth-quarter fiscal 2022 non-GAAP earnings of $1.29 per share, beating the Zacks Consensus Estimate by 20.56%.

Revenues, on a non-GAAP basis, improved 21% year over year to $1.07 billion and surpassed the consensus mark by 1.81%.

In the reported quarter, Zoom Video revenues benefited from growth in enterprise business.

Zoom’s shares have fallen 27.9% year to date, compared with the Zacks Internet Software industry’s decline of 28.9%. Meanwhile, the Computer & Technology sector has tumbled 12.9%.

Strong demand for Zoom phone impacted the growth of revenues positively. In the fiscal fourth quarter, Zoom phone added 550,000 new paid seats. The improvement in Zoom phone was primarily due to growth of large customers with ARR of $1000,000 reflecting growth of 149% year over year. Meanwhile, the number of paid seats were more than 10,000, highlighting a whopping increase of 122% year over year.

Zoom Video Communications, Inc. Price, Consensus and EPS Surprise

Zoom Video Communications, Inc. Price, Consensus and EPS Surprise
Zoom Video Communications, Inc. Price, Consensus and EPS Surprise

Zoom Video Communications, Inc. price-consensus-eps-surprise-chart | Zoom Video Communications, Inc. Quote

Quarter in Detail

Expanding customer base was a major contributor to the positive earnings in the reported quarter. In the fourth quarter, Zoom customers contributing more than $100,000 in revenues in trailing 12 month grew 66%. These customers accounted for 23% of revenues, up from 18% in the year-ago quarter.

Zoom customers with more than 10 employees increased 9% year over year to 509,800. These customers represented 67% of total revenues, up from 63% in the fourth quarter of fiscal 2021.

Enterprise customers grew 35% year over year to 191,000. With regard to contribution to revenues, enterprise customers grew 38%, representing 50% of total revenues.

However, growth in the Online business, which represents other half of revenues, has been slower than the enterprise business due to the impact of the pandemic.

This business is an attractive model from the view point of profitability and cash flow perspective, thus slower growth in this business model has slightly hampered bottom-line growth.

Growth in the international market was a contributor to the positive revenue growth. Revenues grew 21% in America, while in the international market revenues from APAC and EMEA grew 23% year over year.

Operating Details

Non-GAAP Gross Margin expanded by 699 bps to 78.3% year over year.

Research and development expenses grew by 323 bps year over year to $72 million. Sales and Marketing expenses expanded by 539 bps to $251 million, while General and Administrative expenses increased by 4 bps to $95 million.

Non-GAAP operating income increased 16.3% to $420 million year over year. Non-GAAP operating margin contracted by 167 bps to 39.2%.

Balance Sheet and Cash Flow

As of January 31, 2022, cash, cash equivalents and marketable securities were $5.4 billion.

As of January 31, 2022, adjusted free cash flow was $274 million.

Guidance

Zoom expects first-quarter fiscal 2023 revenues in the range of $1.07 billion to $1.075 billion.

Non-GAAP earnings per share in the range of 86 cents to 88 cents.

Zacks Rank & Other Stocks to Consider

Zoom carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks to consider in the same sector are Blend Labs BLND, Asana ASAN and Allied Motion Technologies AMOT.

Blend Labs, Allied Motion Technologies and Asana carry Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Blend Labs’ shares have tumbled 57.7% in the past year.

Blend Labs is scheduled to report fourth-quarter 2021 results on Mar 2.

Asana’s shares have returned 55.9% in the past year.

Asana is scheduled to report fourth-quarter 2022 results on Mar 9.

Allied Motion Technologies’ shares have returned 7% in the past year.

AMOT is scheduled to report fourth-quarter 2021 results on Mar 9.


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