Zoom Shares Explode on Blow Out Quarter

Shares of Zoom were soaring on Monday after the company reported fiscal second-quarter earnings and raised its fiscal year guidance and surpassed analysts’ estimates. Shares were up much as 25% in extended trading after Wall Street digested the numbers.

For the second quarter, Zoom reported 92 cents per share adjusted versus the 45 cents adjusted that analysts expected, per Refinitiv. Revenue at $663.5 million was also higher than the $500.5 million that was expected by analysts, per Refinitiv.

Revenue grew 355% on an annualized basis in the fiscal second quarter, which ended on July 31st. This is compared to the previous quarter where Zoom’s revenue grew 169%.

New customers’ subscriptions delivered 81% of the revenue growth, and there was less customer churn than expected said finance chief Kelly Steckelberg.

Steckelberg said on the earnings call, “Q2 was a remarkable quarter for Zoom as we continued to rapidly grow and invest in our business to meet the needs of our customers and community.”

The CFO added, “Total revenue grew 355% year-over-year, to $664 million dollars in Q2. This top line result significantly exceeded the high end of our guidance range of $500 million dollars as demand remained at heightened levels, combined with lower-than-expected churn and exceptional sales execution.For the quarter,the year-over-year growth in revenue was primarily due to subscriptions provided to new customers, which accounted for approximately 81% of the increase, while subscriptions provided to existing customers accounted for approximately 19% of the increase.This demand was broad-based across industry verticals, geographies and customer cohorts.”

Zoom averaged 148.4 million monthly active users in the quarter, up 4,700% year over year, RBC analysts led by Alex Zukin wrote in a note earlier this month, citing data from app analytics start-up SensorTower. RBC has an equivalent of a buy rating on Zoom shares.

During the quarter, the company hired information security and diversity leaders, added Lt. Gen. Herbert Raymond “H.R.” McMaster to its board, announced plans for research and development centers in Phoenix and Pittsburgh, and said it acquired secure messaging start-up Keybase.

Looking ahead at the third quarter, the company is expecting earnings of 73 cents to 74 cents a share on an adjusted basis with revenue in the range of $685 million to $690 million. Analysts per Refinitiv are expecting adjusted earnings of 35 cents on revenue of $492.9 million.

For the full 2021 fiscal year, Zoom is expecting adjusted earnings per share in the range of $2.40 to $2.47 and revenue of $2.37 billion to $2.39 billion. Consensus among analysts polled by Refinitiv was $1.30 in adjusted earnings per share and $1.81 billion in revenue.

Zoom shares are up nearly 400% since the beginning of the year.

Disclaimer: We have no position in Zoom Video Communications Inc. (NASDAQ: ZM) and have not been compensated for this article.