Earnings Call Highlights - Zoom

Zoom Earnings Call Highlights

Zoom is down around 16% following its third-quarter results announcement. While the company’s drop from its COVID-19 peak continues, the earnings call had some very encouraging indicators.

Strong retention numbers: “Our net dollar expansion rate for customers with more than 10 employees exceeded 130% for the 14th consecutive quarter as existing customers increased their spend with Zoom, and we saw strong upsells of Zoom Phone and Zoom Rooms.”

Room for further gross margin expansion: “Non-GAAP gross margin in Q3 was 76%, an improvement from 68.2% in Q3 of last year and stable with Q2 of this year. We remain committed to our multiyear strategy of building out our data centers to support further improvements in gross margin.”

Strong growth and operating leverage: “For the full year of FY '22, we expect revenue to be in the range of $4.079 billion to $4.081 billion, which would represent approximately 54% year-over-year growth up from our previous guidance of 51% issued in August. We expect non-GAAP operating income to be in the range of approximately $1.598 billion to $1.6 billion, which would represent approximately 63% year-over-year growth.”

Product expansion: “From a product perspective, we saw strong demand for Zoom Video Webinars, Zoom Rooms and Zoom Phone. Zoom Phone had year-over-year revenue growth in the triple digits and reached 30 customers with over 10,000 paid seats. The year-over-year growth in revenue for the quarter was driven by a healthy mix between new and existing customers, with existing customers accounting for 26% of the incremental revenue, up from 19% a year ago.”

Zoom announced the following earnings:

The corporation has launched a new $1 billion share repurchase programme.

Revenue of $1.07 billion vs. $1.05 billion expected
$1.29 EPS vs. $1.05 expected

Estimated revenue for Q1 $1.07 billion vs $1.1 billion project

Haha! Meet is better than Zoom imo!

Don’t worry, “expectations” only have a short-term impact on stock prices. Long-term success requires a focus on sales, net income, and year-over-year EPS increase. Guidance is a more powerful tool than thought, as it might alter inventories, at least temporarily, depending on the future of the guidance project.