Zoom's Shares Leap on Strong Fiscal Q4 Earnings, Outpacing Analyst Predictions

📝 SUMMARY: Zoom Video Communications Inc. ($ZM) experienced a notable surge in its share price, climbing as much as 13% in after-hours trading following the announcement of its fiscal fourth-quarter earnings. The company's financial outcomes exceeded the expectations set by analysts, with adjusted earnings per share hitting $1.22 versus the anticipated $1.15, and reported revenue of $1.15 billion surpassing the forecast of $1.13 billion. This marks a modest revenue increase of less than 3% year-over-year, from $1.12 billion, reflecting a phase of single-digit growth after the explosive expansion seen during the Covid-19 pandemic.

Zoom's net income for the quarter stood at $298.8 million, or 98 cents per share, a significant recovery from a net loss of $104.1 million, or 36 cents per share, reported in the same quarter of the previous year. However, the company's growth has decelerated, attributed partly to a sales reorganization that temporarily hindered performance. The end of the quarter saw Zoom with 220,400 enterprise customers, a slight increase from 219,700 at the close of the previous quarter.

The company's CEO, Eric Yuan, highlighted a fourfold increase in downloads of Zoom’s Team Chat migration tool over the last six months, although admitting to shortcomings in marketing its chat capabilities. Looking ahead, Zoom forecasts adjusted earnings per share of $1.18 to $1.20 on revenue of $1.125 billion for the upcoming fiscal first quarter, indicating a growth of less than 2% year-over-year. For the full fiscal year 2025, the company anticipates adjusted earnings per share between $4.85 and $4.88, with revenue expectations set at $4.60 billion, suggesting a modest 1.6% revenue growth. These projections stand in contrast to the LSEG ($LSEG) consensus, which anticipated slightly lower earnings and higher revenue.

Before this optimistic report, Zoom's shares had fallen 12% year-to-date, underperforming compared to the S&P 500's ($.INX) 6% gain over the same period. This quarterly performance may represent a turning point for Zoom as it adapts to post-pandemic market dynamics and refines its growth strategy in a shifting digital communication landscape.

🔍 SOURCE: https://www.cnbc.com/2024/02/26/zoom-zm-q4-earnings-report-2024.html