Zoom Video Communications Inc. has reported a better-than-expected revenue for the fiscal third quarter, primarily driven by strong enterprise sales. The company announced that its sales increased by 3.2% to approximately $1.14 billion, surpassing analysts’ expectations of $1.12 billion.
As the pandemic forced people to work from home, Zoom’s video software became an essential tool for communication. However, the company has now shifted its focus to cater to business customers. To better serve this segment, Zoom has introduced new features like word processing and enhanced its videoconferencing service with the help of artificial intelligence. This move has placed the company in direct competition with Microsoft Corp.’s Teams product.
During the quarter ending on October 31, Zoom witnessed a 7.5% increase in enterprise revenue from its 219,700 customers, amounting to $661 million. Additionally, the company reported a growth of nearly 14% in clients generating over $100,000 in trailing 12-month revenue, reaching a total of 3,731 customers.
Eric Yuan, the CEO of Zoom, emphasized the company’s efforts to enhance its collaboration platform and its commitment to meeting the evolving needs of its customers and employees. He mentioned advanced capabilities like Zoom AI Companion that have been added to their offerings.
Despite concerns about an exodus of casual customers and small businesses after the pandemic, Zoom saw higher retention rates and increased usage of its new AI features. Although the company experienced a monthly churn rate of 3% among these users, it was the slowest rate of customer loss ever reported by Zoom.
Following the positive financial results, Zoom’s shares rose by approximately 1% in extended trading. However, the company has not experienced the same stock rally driven by artificial intelligence this year, with shares declining by 2.6% as of Monday’s market close.
Looking ahead, Zoom has provided a revenue forecast of approximately $1.13 billion for the current period ending in January, aligning with analysts’ estimates. The projected profit, excluding certain items, is expected to be around $1.14 per share, compared to the average estimate of $1.09 per share.
FAQs
1. How did Zoom perform in their fiscal third quarter?
Zoom reported better-than-expected revenue in the fiscal third quarter, with sales increasing by 3.2% to approximately $1.14 billion.
2. Which segment has Zoom focused on recently?
Zoom has shifted its focus to business customers and has introduced new features and artificial intelligence capabilities to enhance its services.
3. How much did Zoom’s enterprise revenue increase in the quarter ended October 31?
Enterprise revenue from Zoom’s 219,700 customers rose by 7.5% to $661 million in the quarter ended October 31.
4. How many clients generate over $100,000 in trailing 12-month revenue for Zoom?
Zoom reported a total of 3,731 clients that contribute more than $100,000 in trailing 12-month revenue, marking a 14% increase from the previous year.
5. What is Zoom’s revenue forecast for the current period?
Zoom has provided a revenue forecast of approximately $1.13 billion for the current period ending in January.