With revenue growth that more than quadrupled year over year and net income that climbed more than 3,000 percent, it’s safe to say that Zoom Video Communications has cemented itself as one of the business success stories during a tumultuous 2020.
Consumers and business users flocked to the popular platform this year to virtually meet and collaborate with colleagues, classmates, friends and family members as the COVID-19 pandemic prompted stay-at-home and quarantine orders around the globe. Now, as restrictions begin to loosen in some areas, many companies are adopting a “hybrid” work-from-home model that will limit in-person gatherings and the number of employees in the office at a time. Needless to say, demand for Zoom’s services won’t be on the decline anytime soon. The company didn’t see any decrease in its second fiscal quarter; in fact, new customer growth contributed to 81 percent of Zoom’s revenues. And Zoom is now larger than both IBM and AMD with a market cap standing at more than US$120 billion.
The video specialist, under the leadership of founder and CEO Eric Yuan, reported Q2 2021 earnings and revenue on Monday evening that blew past Wall Street estimates. Zoom lifted its annual revenue outlook at the same time.
Here are five things you need to know about Zoom‘s impressive Q2 2021 earnings and its strong financial forecast for the rest of the year.
For the Q2 fiscal year 2021 that ended on July 31, Zoom‘s total revenue was US$663.5 million, up a whopping 355 percent year-over-year. In Q1 2021 earlier this year, the company’s earnings rose by 169 percent.
On a non-GAAP basis, net income for the quarter was an impressive US$274.8 million. Non-GAAP net income per share was 92 cents compared to a year ago when non-GAAP net income was US$24.0 million, or 8 cents per share.
At the end of Q2, Zoom had approximately 370,200 customers with more than 10 employees, up approximately 458 percent from the same quarter last fiscal year. Just a year ago, Zoom had 66,300 customers paying for subscriptions.
According to Zoom CFO Kelly Steckelberg, the number of customers contributing more than US$100,000 in trailing twelve months (TTM) revenue was up 112 percent year-over-year. New customers subscriptions contributed 81 percent of the revenue growth and there was less customer churn than expected, the company said.
Earnings Compared To Estimates
Zoom earnings crushed Wall Street estimates during the quarter. Analysts predicted 45 cents in adjusted per share revenues compared to 92 cents. The company reported total revenue of US$663.5 million, versus US$500.5 million as expected by analysts.
As a result, Zoom‘s stock on Tuesday morning soared to a high of US$475.01, up as much as 40 percent.
The onset of the pandemic sparked data privacy concerns that plagued the easy-to-use, cloud-based video platform. As a result, Zoom embarked on a 90-day security enhancement plan to boost the security of its offerings, which the company wrapped up on July 1.
Despite early security concerns, Zoom said it believes it has addressed most of the issues and closed the loopholes. The company said it successfully won back some school districts and larger customers that had abandoned the service because of security concerns.
Financial Outlook Very Good
The company’s strong revenues enabled Zoom to significantly increase its guidance for the full fiscal year 2021. Zoom’s total revenue outlook expected to be between US$2.37 billion to US$2.39 billion, or a 281 percent to 284 percent increase year-over-year.
For the next quarter, Q3 2021, the company now expects total revenue to be between US$685.0 million and US$690.0 million and non-GAAP income from operations is expected to be between US$225.0 million and US$230.0 million. Non-GAAP diluted EPS is expected to be between 73-74 cents.