Zoom stock soars on earnings beat, share buyback

Zoom Video Communications (ZM) reported fourth-quarter earnings that topped analyst estimates. Adjusted earnings per share of $1.42 trounced estimates of $1.15. Revenue of $1.15 billion was slightly better than the expected $1.13 billion. The company also announced plans to buy back up to $1.5 billion worth of shares.

Yahoo Finance's Josh Lipton and Julie Hyman break down the report.

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Editor's note: This article was written by Stephanie Mikulich

Video Transcript

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JOSH LIPTON: Well, check out shares of Zoom. They are flying higher here after reporting a beat on both bottom and top and announcing a share buyback. Let's quickly break down the numbers for you. So Zoom, Julie, adjusted EPS 142 versus 115 consensus. Revenue, $1.15 billion, expectation was $1.13 billion. So beats there on bottom and top lines. Looking ahead, Q1 revenue, they see $1.13 billion. That's in line.

For 2025, they're looking for $4.6 billion. The estimate was around $4.66 billion. And importantly though, the capital return news here as well. They did OK, a stock repurchase program of up to 1.5 billion.

JULIE HYMAN: Yeah. And it's interesting. They hit all the-- they hit all the popular notes in the press release. Eric Yuan, the CEO among other things talking about democratizing AI accessibility in the release here. But one of the things that people have been looking for consistently from the company is large customers. But also adding on diversity across the size of customers. The company said it has about 220,400 enterprise customers, which is up 3.5%.

If you look at its largest customers, just over 3,800 contributed more than $100,000 in trailing 12-month revenue. That's up about 9.8%. So those are numbers that investors are going to be looking for as well.

JOSH LIPTON: Yeah. I mean, Zoom, we always think about it with such a pandemic Darling and enjoyed such strong growth. Post pandemic not as much enthusiasm for this one, I mean. Heading into the print, this one was in the red year to date over the past 12 months. And you would hear analysts who cover it saying, yes, it was cheap. But they were waiting for a catalyst, maybe now they've got it.

JULIE HYMAN: Well. And there's also competition from the likes of Teams and other video call--

JOSH LIPTON: Big competition from Microsoft for sure.

JULIE HYMAN: --services. So that's something that investors have watched closely as well.