Zoom Video Communications Surpasses Expectations

Last Updated: 22. November 2023By

Investors eagerly awaited the numbers from US tech giant Zoom Video Communications and the company delivered. Both revenue and profits exceeded expectations. However, the stock price could not benefit from this. In yesterday’s afternoon trading, the shares were hovering around 65 dollars. This puts the stock still far from its old highs of 570 dollars reached during the pandemic last autumn.

Zoom โ€“ one of the big crisis beneficiaries Zoom Video Communications was founded in 2011 and has become synonymous with video communication during the Corona crisis. As a provider of video-based communication software, the company enables easy exchange of information via video, telephony, chat and content sharing from different devices. The platform offers video conferences, meetings, webinars and chat options that can be attended by participants via PC, smartphone, other mobile devices or conference room systems. For businesses, Zoom offers advanced tools and integration options for customizing their workflows. The company has been listed on the stock exchange since April 2019.

Home office boom creates special conjuncture The last few years have been intense: where revenue in 2017 was only 61 million dollars, at the end of the business year ended in January 2023 there were revenues of 4.39 billion dollars. Meanwhile, the US company continued to be profitable on a year-to-year basis. In the end, the net profit was 103.7 million dollars, compared to 1.37 billion dollars in the previous year.

Zoom with low-digit growth… Even though the business dynamics have now slowed down significantly, the company managed to impress with the numbers delivered. In the past third quarter, which ended in late October, revenues rose 3.6% to 1.14 billion dollars. Enterprise revenue, which Zoom makes with corporate solutions, rose 7.5% to 660.6 million dollars, while online revenue fell 2.4% to 476.1 million dollars.

The video conferencing company announced that it had benefited from higher customer loyalty in its online business and the use of its new artificial intelligence offerings. Although growth cannot keep up with previous years, the expectations of analysts were exceeded by 20 million dollars.

… and significantly higher profits At the same time, the company made significant progress in profitability. The adjusted profit increased from 323.2 million in the previous year to 401.2 million dollars (+25%). In the end, there was a profit of 1.29 dollars per share. This was significantly higher than the estimates of analysts, who had expected only 1.08 dollars per share in advance of the numbers.

Year-end outlook pleasantly surprises Zoom also provided a pleasant surprise with its outlook: for the 2024 fiscal year, based on constant exchange rates, the technology company expects revenues of 4.54 to 4.54 billion dollars. The adjusted profit is expected to be between 4.93 and 4.95 dollars. So far, analysts have only expected a profit per share of 4.66 dollars.

At present, the stock is trading at 13 times the earnings expected for this year. The balance sheet is particularly strong. At the end of the quarter, Zoom had a cash balance of 6.5 billion dollars. That’s about a third of the total market value.