Zoom Q1 Earnings & Revenue Outperform; Raises FY22 Guidance

Zoom Video Communications, Inc. (ZM) posted yet another blowout quarter with triple-digit growth in both revenue and earnings driven by new customer acquisitions and existing customer expansion.

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Adjusted earnings in fiscal Q1 exploded 560% to $1.32 per share from the year-ago period and surpassed the Street’s estimates of $0.99 per share.

Total revenue grew 191% year-over-year to $956.23 million, beating analysts’ expectations of $906 million.

Zoom is a cloud-based peer-to-peer software platform that connects people through video telephony and online chat services. (See Zoom stock analysis on TipRanks)

Compared to the year-ago period, the number of customers paying more than $100,000 in the trailing 12 months revenue climbed 160% to 1,999 customers, and customers with more than 10 employees grew 87% to around 497,000.

Zoom founder and CEO, Eric S. Yuan said, “Our steadfast commitment to empowering customers to work and learn from anywhere with our expansive, innovative, and frictionless video communications platform continued to drive our results…We are energized to help lead the evolution to hybrid work that allows greater flexibility, productivity, and happiness to both in-person and virtual connections.”

For the second quarter of Fiscal 2022, the company forecasts total revenue and earnings to fall in the range of $985 – $990 million and $1.14 – $1.15 per share, respectively. The Street estimates revenue of $931.7 million and earnings of $0.94 per share.

For the Fiscal Year 2022, the company now projects total revenue to be in the range of $3.975 – $3.99 billion and earnings in the range of $4.56 – $4.61 per share. Analysts’ estimates of revenue and earnings are pegged at $3.8 billion and $3.76 per share, respectively.

Following the results, Oppenheimer analyst Ittai Kidron reiterated a Hold rating on the stock and said, “We are incrementally positive on Zoom’s growth prospects in a post-pandemic world, and see opportunities to capitalize on the hybrid work environment, and gain traction with new Zoom Events and Phone Appliances. Looking ahead, our attention turns to the pace of G2K penetration, new product adoption, and churn for customers with fewer than ten employees.”

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 7 Buys, 8 Holds, and 2 Sells. The average analyst price target of $403.13 implies 23.8% upside potential to current levels. Shares have lost around 9% year-to-date.

Zoom scores a 9 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.