Zoom Video Continues Huge Run After Beat-And-Qaise Q1; User Base Swells Amid Pandemic

Video conferencing company Zoom Video Communications Inc ZM reported Tuesday fiscal first-quarter results that exceeded estimates by a wide margin, and also raised its full-year guidance notably above consensus, as the COVID-19 crisis accelerated adoption of its platform.

Zooms Past Estimates

San Jose, California-based Zoom reported adjusted first-quarter EPS of 20 cents compared to 3 cents in the year-ago period. Revenue climbed 169% year-over-year to $328.2 million compared to the year-ago revenues of $121.99 million.

Analysts, on average, expected the company to report earnings per share of 9 cents on revenues of $202.48 million.

"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 Yuan, founder and CEO of Zoom.

Even ahead of the pandemic, Zoom's revenues were increasing at a scorching pace. Fourth-quarter revenues jumped 78% year-over-year to $188.3 million.

Other Key Zoom Metrics

Zoom attributed the strong top-line growth to its new customer acquisition and expansion across existing customers.

• About 265,400 customers with more than 10 employees, up 354% year-over-year
• 769 customers contributing over $100,000 in trailing 12 months
• Net dollar expansion rate among customers with more than 10 employees of over 130% for the eighth consecutive quarter

On its fourth-quarter earnings call, the company had said it has 81,000 customers with more than 10 employees, with this segment accounting for 80% of the company's revenues.

Cash, cash equivalents and marketable securities as of April 30 stood at $1.1 billion.

See Also: Mike Khouw Sees Unusual Options Activity In Zoom Video Ahead Of Earnings

Zoom Addresses Security Concerns

The company was embroiled in controversy over security issues with respect to its platform, especially with respect to privacy of personal information and data.

In late April, Zoom announced the launch of Zoom 5.0 to enhance security and privacy capabilities of its platform. By adding support for AES 256-bit GCM encryption, Zoom said it will provide increased protection for meeting data and resistance against tampering. The company announced in early May the acquisition of Keybase, a secure messaging and file-sharing service.

Zoom's Forward Outlook

Looking ahead to the second quarter, Zoom expects non-GAAP EPS of 44-46 cents and revenues of $495 million to $500 million.

The company raised its full-year 2021 non-GAAP EPS guidance from 42-45 cents to $1.21-$1.29, and revenue guidance from $905 million-$915 million to $1.775 billion-$1.80 billion. This trumped the consensus expectations, which call for EPS of 45 cents on revenues of $934 million.

Related Link: P/E Ratio Insights for Zoom Video Communications

Zoom's Stock

Zoom shares have had a 200% run-up in the year-to-date period.

The company IPO'd in April 2019, offering 20.87 million shares at a price of $36 per share. The stock closed the debut session at $62, a neat 77% gain from the offer price. After hitting a high of $107.34 in June, the stock headed lower through the second half of the year.

The stock was back on a rally mode since February, as the COVID-19-induced stay-at-home orders around the world perked up demand for its video conferencing app.

Shares traded higher by 4.5% to $217.64 in the after-hours session.