Zoom Forecasts Sales Surge As Video Conferencing Becomes A Daily Routine

September 6, 2020

According to Reuters,  Zoom Video Communications Inc raised its annual revenue forecast by more than 30% after comfortably beating quarterly estimates on Monday as it converts more of its huge free user base to paid subscriptions.

Shares of the company rose 9.3 percent to $355.30 after the bell. It had hit an earlier high of $325.10 in regular trading. Its rivals, such as Microsoft Corp’s Team and Cisco System Inc’s Webex have also seen soaring usage.

it seems the company has stated that revenue rose 355% to $663.5 million, topping analysts’ average estimate of $500.5 million. While the company’s gross profit rose to 71% from 68%, it still is far below the 80% range that the company operated before free users rushed to the service.

Apparently, according to Reuters, on a conference call with investors, Zoom Chief Financial Officer Kelly Steckelberg said the company’s gross profits will remain in the same range as the fiscal second quarter for the rest of the fiscal year.

She also said the company was experiencing slightly higher rates of customer cancellation than Zoom’s historical average, but that the new rates had been factored into the company’s forecast.

The article by Reuters states that Zoom’s number of large customers – those generating more than $100,000 in revenue in the past year – more than doubled to 988 in the fiscal second quarter.

These are some highlights from the official press release.

Second Quarter Fiscal Year 2021 Financial Highlights:

  • Revenue: Total revenue for the quarter was $663.5 million, up 355% year-over-year.
  • Income from Operations and Operating Margin: GAAP income from operations for the quarter was $188.1 million, compared to $2.3 million in the second quarter of fiscal year 2020. After adjusting for stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, and acquisition-related expenses, non-GAAP income from operations for the second quarter was $277.0 million, up from $20.7 million in the second quarter of fiscal year 2020. For the second quarter, GAAP operating margin was 28.3% and non-GAAP operating margin was 41.7%.
  • Net Income and Net Income Per Share: GAAP net income attributable to common stockholders for the quarter was $185.7 million, or $0.63 per share, compared to GAAP net income attributable to common stockholders of $5.5 million, or $0.02 per share in the second quarter of fiscal year 2020.
  • Cash: Total cash, cash equivalents, and marketable securities as of July 31, 2020 was $1.5 billion.
  • Cash Flow: Net cash provided by operating activities was $401.3 million for the quarter, compared to $31.2 million in the second quarter of fiscal year 2020. Free cash flow was $373.4 million, compared to $17.1 million in the second quarter of fiscal year 2020.
  • Customer Metrics: Drivers of total revenue include acquiring new customers and expanding across existing customers. At the end of the second quarter of fiscal year 2021, Zoom had:
  • Financial Outlook: Zoom is providing the following guidance for its third quarter fiscal year 2021 and its full fiscal year 2021

Full Fiscal Year 2021: Total revenue is expected to be between $2.37 billion and $2.39 billion. This revenue outlook takes into consideration the demand for remote work solutions for businesses.

It also assumed increased churn in the second half of the fiscal year when compared to historic churn levels due to a higher percentage of customers who purchased monthly subscriptions in the first quarter.

Non-GAAP income from operations is expected to be between $730.0 million and $750.0 million. Non-GAAP diluted EPS is expected to be between $2.40 and $2.47 with approximately 300 million non-GAAP weighted average shares outstanding.

Source: Reuters & Zoom.

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