Zoom shares saw a jump of as much as 13% in extended trading on Monday after the video chat software vendor announced fiscal Q4 sales results that topped analysts’ expectations. Zoom Video Communications on Monday posted better-than-expected Q4 results helped by strong demand for its expanding product portfolio as more employers embrace hybrid work models, sending its shares jump about 13% in extended trading. Zoom shares rising is a sign that corporate customers are sticking with the software company.
Zoom also authorized a stock buyback of up to $1.5 billion of its outstanding Class A common stock.
Zoom Q4 sales and revenue
Here’s how the company did, compared with consensus among analysts polled by LSEG, formerly known as Refinitiv:
Zoom earnings per share: $1.22 adjusted vs. $1.15 expected
Zoom revenue: $1.15 billion vs. $1.13 billion expected
Revenue increased less than 3% from $1.12 billion a year earlier, according to a statement.
Zoom net income: Net income was of $298.8 million, or 98 cents per share, for Q4 compared with a net loss of $104.1 million, or 36 cents per share, in the year-ago quarter.
Why Zoom shares jump
The video-conferencing provider’s Q4 results indicate Zoom’s attempts to integrate AI into its products and diversify its portfolio have paid off, as it takes advantage of a surge in hybrid working.
Increase in enterprise customers
Far from its heyday during the Covid-19 pandemic, when a surge in the number of remote workers sent revenue up over 100% for five straight quarters, Zoom is now mired in single-digit growth.
Growth would have been faster in the fiscal fourth quarter if not for a sales reorganization. It “took a lot of time for the organization to recover from, frankly,” Kelly Steckelberg, Zoom’s finance chief, said on a conference call with analysts.
At the end of the fiscal fourth quarter, Zoom had 220,400 enterprise customers, up from 219,700 at the end of the prior quarter.
“The company is doubling down on its long-term strategy to integrate generative AI rather than risk its massive cash holdings on a start-up that might more immediately drive topline growth,” said Ryan Koontz, a senior equity analyst at Needham and Co.
AI companion
Zoom introduced its AI companion during its third quarter, allowing paid users to access features including meeting summaries and catch-ups, as well as email and chat composing prompts.
“We are also going to build new services and are driven by Zoom AI companion, this year we are going to double down on Zoom AI customization and also focus on monetization,” said Zoom CEO Eric Yuan on a post-earnings conference call.
The Zoom AI companion has over 510,000 accounts enabled in the past five months, CFO Kelly Steckelberg said.
Team Chat migration tool
Zoom’s Team Chat migration tool “has seen a 4x increase in downloads in the last six months,” Eric Yuan, the company’s founder and CEO, said during the call. He said Zoom hasn’t done a great job of marketing its chat capabilities.
For the fiscal first quarter, Zoom called for $1.18 to $1.20 in adjusted earnings per share on $1.125 billion in revenue, which would represent growth of less than 2% from a year earlier. Analysts surveyed by LSEG were looking for $1.13 in adjusted earnings per share and $1.13 billion in revenue.
For the 2025 fiscal year, Zoom sees $4.85 to $4.88 in adjusted earnings per share, with $4.60 billion in revenue, implying 1.6% revenue growth. The LSEG consensus was adjusted earnings of $4.71 per share and revenue of $4.65 billion.
Before the jump, Zoom shares were down 12% so far this year, while the S&P 500 stock index had gained 6% during the same period.
The company also reported operating cash flow margin of 30.6% for the reported quarter.
Zoom forecast fiscal-year 2025 revenue of about $4.60 billion, which is below analysts’ estimate of $4.66 billion.
It also forecast first-quarter revenue of $1.13 billion, in line with analysts’ expectations.
