Yahoo Finance Zoom (ZM) Q3 Earnings Beat, Customer Growth Drives Revenues
Zoom’s ZM third-quarter fiscal 2024 adjusted earnings of $1.29 per share beat the Zacks Consensus Estimate by 19.44% and increased 20.6% year over year.
Revenues of $1.13 billion beat the consensus mark by 1.66% and increased 3.2% year over year on strong growth from Enterprise customers.
Zoom Video Communications, Inc. Price, Consensus and EPS Surprise
Zoom Video Communications, Inc. price-consensus-eps-surprise-chart | Zoom Video Communications, Inc. Quote
Quarter Details
Revenues from Enterprise customers grew 7.5% year over year to $660.6 million and represented 58% of total revenues. Customers contributing more than $100,000 in revenues in the trailing 12 months grew 13.5% to 3,731. These customers accounted for 29% of revenues, up from 27% in the year-ago quarter.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 105%.
The number of Enterprise customers grew 5% year over year to more than 219,700.
Zoom Phone reached approximately seven million paid seats. Zoom Contact Center reached approximately 700 customers as of quarter-end, while Zoom Virtual Agent customers nearly doubled quarter over quarter. The number of customers on Zoom One bundles that include Zoom Phone grew approximately 330% year over year.
Revenues increased 5.2% in America, while international market revenues from APAC and EMEA decreased 2.2% and 1.4% year over year, respectively.
Non-GAAP Operating Details
Gross margin expanded 20 basis points (bps) to 79.7% in the fiscal third quarter of 2024.
Research and development expenses decreased 2% year over year to $105.7 million. Sales and marketing expenses decreased 5.6% to $283.8 million, while general and administrative expenses decreased 19.7% to $69.8 million.
Operating income increased 17.4% to $447.1 million year over year. Operating margin expanded 480 bps to 39.3%.
Balance Sheet
Total cash, cash equivalents and marketable securities as of Oct 31, 2023, were $6.49 billion. As of Jun 31, 2023, cash, cash equivalents and marketable securities were $6 billion.
Free cash flow as of Oct 31, 2023, was $453.2 million. As of Jul 31, 2023, free cash flow was $289.4 million.
Guidance
Zoom expects fourth-quarter fiscal 2024 revenues in the range of $1.125 billion to $1.13 billion.
Non-GAAP earnings per share are expected in the range of $1.13 to $1.15.
For fiscal 2024, Zoom expects revenues in the range of $4.506-$4.511 billion.
Non-GAAP earnings per share are expected in the range of $4.93 to $4.95.
Zacks Rank & Key Picks
Currently, Zoom carries a Zacks Rank #3 (Hold). Shares of ZM have declined 2.6% year to date.
Some better-ranked stocks from the broader Computer and Technology sector are Adobe ADBE, Asana ASAN and Broadcom AVGO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Adobe’s fourth-quarter fiscal 2024 earnings has remained steady at $4.13 per share in the past 30 days. For fiscal 2024, earnings estimates have remained steady at $15.93 in the past 30 days.
ADBE's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.29%. Shares of ADBE have rallied 82.1% year to date.
The Zacks Consensus Estimate for Asana's third-quarter 2023 loss per share is pegged at 11 cents per share in the past 30 days. For 2023, bottom-line estimates for loss have narrowed by a penny to a loss of 39 cents per share in the past 30 days.
ASAN' earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 43.47%. Shares of ASAN have gained 58.6% year to date.
The Zacks Consensus Estimate for Broadcom's fourth-quarter fiscal 2024 earnings has remained unchanged for the past 30 days at $10.96 per share. For fiscal 2024, earnings estimates have remained steady at $42.14 per share in the past 30 days.
AVGO’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 1.61%. Shares of AVGO have climbed 78.1% year to date.
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