Zoom Video Communications Inc.’s stock surged in extended trading on Monday after the company surpassed expectations with its financial results and forecasts.
Impressive Q2 Performance
In the fiscal second quarter, Zoom reported a net income of $182 million, or 59 cents per share, on revenue of $1.14 billion. This marked substantial growth compared to the previous year’s revenue of $1.1 billion. Adjusting for stock compensation and other effects, Zoom’s earnings per share stood at $1.34, exceeding last year’s $1.05 per share and beating analysts’ expectations.
According to FactSet, analysts had estimated an adjusted net income of $1.06 per share on revenue of $1.11 billion. Therefore, Zoom’s results were pleasantly surprising.
Zoom also provided optimistic forecasts for the third quarter. The company anticipated adjusted earnings of $1.07 to $1.09 per share, with revenue ranging from $1.12 billion to $1.21 billion. This outlook exceeded analysts’ average projections of $1.03 per share on sales of $1.06 billion, as reported by FactSet.
Furthermore, Zoom projected strong full-year performance, with adjusted earnings expected to be between $4.63 and $4.67 per share, and revenue forecasted to be within the range of $4.49 billion to $4.5 billion. These figures surpassed analysts’ average expectations of $4.32 per share on sales of $4.5 billion.
Zoom’s Chief Executive, Eric Yuan, expressed excitement about the outstanding results. He praised the company’s innovation and shared, “We delivered GAAP EPS of $0.59 and non-GAAP EPS of $1.34 in Q2, both showing significant year-over-year growth. With our strong operating discipline, we achieved a 31% increase in operating cash flow to $336 million.”
Following the announcement, Zoom’s stock rose by over 7% in after-hours trading. Although the stock has experienced a slight decline of 0.7% this year, it is worth noting that the broader S&P 500 index has risen by 15%.
Transitioning Back to the Office
In line with several other tech firms, Zoom recently made the decision to have most of its 7,400-person workforce return to the office. As part of this plan, employees who reside within 50 miles of an office will be required to work in person on a part-time basis starting from August and September.
The excellent Q2 performance and strategic workplace adjustments suggest that Zoom is determined to continue its growth trajectory and solidify its position as a leader in the videoconferencing industry.