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Zoom's (ZM) Q3 Earnings Top Estimates, Revenues Jump Y/Y

Zoom’s ZM third-quarter fiscal 2022 adjusted earnings of $1.11 per share beat the Zacks Consensus Estimate by 1.8% and increased 12.1% year over year.

Revenues of $1.05 billion surpassed the consensus mark by 3% and increased 35.2% year over year.

This outperformance was driven by a healthy mix of new and existing customers, with new customers accounting for around 74% of the incremental revenues and existing customers accounting for 26% of the same.

Revenues from Americas (66.6% of revenues) jumped 30% year over year to $700 million. Revenues from EMEA (19% of revenues) soared 48.1% from the year-ago quarter to $200 million. Revenues from APAC (14.3% of revenues) were $150 million, up 45.6% year over year.

 

Zoom shares tumbled 6.3% in after-hours trading on fears of slowing growth prospects. Shares are down 28.2% year to date, underperforming the Zacks Internet Software industry’s decline of 11.1% and the Computer & Technology sector’s return of 28.5%.

User Base Jumps in Q3

At the end of the fiscal third quarter, Zoom had roughly 512,100 customers (with more than 10 employees), up 18% year over year. Its trailing 12-month net dollar-expansion rate in customers with more than 10 employees was above 130% for the 14th consecutive quarter.

Zoom had 2,507 customers with more than $100,000 in trailing 12-month revenues, up roughly 94% year over year.

Zoom Phone witnessed triple-digit year-over-year revenue growth in the reported quarter. Zoom Phone reached 30 customers with more than 10K paid seats.

Operating Details

Non-GAAP gross margin in the quarter under review expanded 770 basis points (bps) on a year-over-year basis to 76%.

Non-GAAP research & development (R&D) expenses as a percentage of revenues expanded 320 basis points (bps) on a year-over-year basis to 6.4%. Non-GAAP general & administrative (G&A) expenses decreased 160 bps on a year-over-year basis to 7.8%.

Moreover, non-GAAP sales & marketing (S&M) expenses as a percentage of revenues expanded 440 bps on a year-over-year basis to 22.6%.

Non-GAAP operating income surged 41.4% year over year to $411.3 million. Operating margin expanded 170 bps on a year-over-year basis to 37.4%.

Balance Sheet & Cash Flow

As of Oct 31, 2021, cash and cash equivalents and marketable securities were $5.4 billion compared with $5.1 billion as of Jul 31, 2021.

Non-GAAP free cash flow was $374.8 million in the quarter under review compared with $455 million in the previous quarter and $388.2 million in the year-ago quarter.

Guidance

For fourth-quarter fiscal 2022, Zoom expects revenues between $1.051 billion and $1.053 billion. Non-GAAP income from operations is expected between $361 million and $363 million. Moreover, non-GAAP earnings are expected in the $1.06-$1.07 per share range.

For fiscal 2022, Zoom now expects revenues between $4.079 billion and $4.081 billion.

Non-GAAP income from operations is expected between $1.598 billion and $1.600 billion. Moreover, non-GAAP earnings are expected in the $4.84-$4.85 per share range.

Zacks Rank & Upcoming Earnings to Watch

Currently, Zoom Video carries a Zacks Rank #3 (Hold).

Investors interested in the Computer & Technology sector are eagerly awaiting earnings releases from players like Hewlett Packard HPE, salesforce CRM, and Jabil JBL.

Hewlett Packard is set to release its fourth-quarter fiscal 2021 results on Nov 30. The Zacks Consensus Estimate for earnings is pegged at 49 cents per share, unchanged over the past 30 days. Hewlett Packard sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hewlett Packard shares have returned 24.6% year to date compared with the Zacks Computer-Integrated Systems industry’s growth of 0.4% and the Computer & Technology sector’s return of 28.5%.

salesforce, a Zacks Rank #1 stock, is scheduled to release third-quarter fiscal 2022 results on Nov 30. The Zacks Consensus Estimate for earnings stands at 92 cents per share, unchanged over the past 30 days.

salesforce shares have returned 33.4% year to date, underperforming the Zacks Computer-Software industry’s rise of 45%. However, the stock has outperformed the Computer & Technology sector’s return of 28.5% year to date.

Jabil is likely to release first-quarter fiscal 2022 results on Dec 16. The Zacks Consensus Estimate for earnings stands at $1.80 per share, unchanged over the past 30 days.

Jabil shares have returned 46.4% year to date against the Zacks Electronics- Manufacturing Services industry’s rally of 32.2%. The stock has outperformed the Computer & Technology sector’s return of 28.5% year to date.


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salesforce.com, inc. (CRM): Free Stock Analysis Report
 
Jabil, Inc. (JBL): Free Stock Analysis Report
 
Hewlett Packard Enterprise Company (HPE): Free Stock Analysis Report
 
Zoom Video Communications, Inc. (ZM): Free Stock Analysis Report
 
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