Zoom Video Communications (NASDAQ: ZM) announced its fiscal second-quarter results on Monday, beating analysts’ expectations and raising its full-year guidance. The video-calling software provider reported adjusted earnings of $1.34 per share on revenue of $1.14 billion, which grew 3.6% year over year.
Zoom’s enterprise business drives growth
Zoom attributed its strong performance to the growth of its enterprise business, which delivers 54% of total revenue. The company said it had around 218,100 enterprise customers at the end of July, up 1% from the previous quarter. Enterprise customers are business units that Zoom’s direct sales teams, resellers or partners work with.
Zoom also announced new features and initiatives to enhance its platform and attract more customers. During the quarter, Zoom said that through free trials, certain customers could start requesting call summaries that they can share without recording conversations. The company also said it invested in artificial-intelligence startup Anthropic, which aims to create general-purpose AI systems.
Zoom faces challenges in online business and macro environment
Despite its impressive results, Zoom also faced some challenges in the quarter, especially in its online business and the macro environment. Online business customers are Zoom customers that don’t work directly with Zoom salespeople, resellers or partners.
Zoom’s finance chief Kelly Steckelberg said in a statement that the strong U.S. dollar, performance in the company’s online business and sales that got weighted toward the end of the quarter negatively impacted revenue in the quarter. “We have implemented initiatives focused on driving new online subscriptions, which have shown early promise but were not enough to overcome the macro dynamics in the quarter,” Steckelberg said on a Zoom call with analysts.
Zoom’s quarterly guidance came up just short of analysts’ estimates. The company expects adjusted earnings of $1.07 to $1.09 per share on revenue of $1.115 billion to $1.120 billion in the fiscal third quarter. Analysts polled by Refinitiv had expected $1.03 in adjusted earnings per share and $1.13 billion in revenue.
Zoom raises full-year outlook amid uncertainty
Despite the challenges and uncertainties posed by the Covid-19 pandemic and the changing work environment, Zoom raised its full-year outlook for fiscal 2024. The company now expects adjusted earnings of $4.63 to $4.67 per share on revenue of $4.485 billion to $4.495 billion for the full year, implying 2% growth at the middle of the revenue range.
Three months ago, Zoom said it was looking for $4.25 to $4.31 in adjusted earnings per share and $4.465 billion to $4.485 billion in revenue for the full year. Analysts polled by Refinitiv had predicted that Zoom would produce $4.30 in adjusted earnings per share and $4.49 billion in revenue.
Zoom’s shares rose 8% in extended trading on Monday after the earnings release, reflecting the market’s positive reaction to the company’s performance and outlook.
