yalcinsonat - stock.adobe.com
While its growth in the post-pandemic world has ceased to be as explosive as three years ago, when the company was the bedrock of the pivot towards home working, Zoom Video Communications has shown solid revenue rises and a sharp uptick in high-value customers and enterprise business in the first quarter of its current financial year – but with profit growth slowing.
For the first fiscal quarter ended 30 April 2023, Zoom posted total revenue of $1.105bn, up 3% year-on-year as reported, and 5% in terms of constant currency. Enterprise revenue was $632m, up 13% compared with the previous year, while online revenue was $473.4m, down 8% on an annual basis.
GAAP income from operations for the first quarter was $9.7m, compared with $187.1m in the first quarter of the previous fiscal year 2023.
After adjusting for stock-based compensation expense and related payroll taxes, acquisition-related expenses, restructuring expenses and ligation settlements, net, non-GAAP income from operations for the first quarter was $422.3m, compared with non-GAAP income from operations of $399.6m in the first quarter of fiscal year 2023.
GAAP net income attributable to common stockholders for the first quarter was $15.4m, compared with $113.6m at the end of the first quarter of fiscal year 2023. Non-GAAP net income for the first quarter was $353.3m after adjusting for the aforementioned dynamics.
Looking at customer metrics, drivers of total revenue in the quarter included acquiring new customers and expanding across existing customers. At the end of the quarter, Zoom had approximately 215,900 enterprise customers, up 9% from the same quarter last fiscal year.
It also showed a trailing 12-month net dollar expansion rate for enterprise customers of 112%, with 3,580 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 23% from the same quarter last fiscal year.
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In Q1, Zoom had an online average monthly churn of 3.1% for Q1, down 50 bps from the same quarter last fiscal year, while the percentage of total monthly recurring revenue (MRR) from online customers with a continual term of service of at least 16 months was 72%, up 700 bps year over year.
“The Zoom platform is designed to support limitless human connection to empower the modern workday and strengthen customer relationships,” said Eric S Yuan, Zoom founder and CEO, commenting on the Q1 results for fiscal 2024. “Our customers see Zoom as mission-critical in how they collaborate internally and externally across the globe.
“This relationship with our customers helped us to exceed our guidance due to enterprise growth and stabilising online revenue while driving greater efficiencies in our business to deliver strong profitability and free cash flow margin. The solid start to the year has enabled us to raise our outlook for fiscal year 2024 while continuing to invest in innovations such as AI to help make interactions more meaningful and communications more effective.”
Looking forward, Zoom expects a Q2 with total revenue between $1.11bn and $1.115bn, and revenue in constant currency is expected to be between $1.12 bn and $1.125bn. Non-GAAP income from operations is projected to be between $405m and $410m. Non-GAAP diluted EPS is expected to be between $1.04 and $1.06, with approximately 307 million weighted average shares outstanding.
Total revenue for the full 2024 fiscal year is forecast to be between $4.465bn and $4.48bn, and revenue in constant currency is expected to be between $4.495bn and $4.515bn. Full fiscal year non-GAAP income from operations is expected to be between $1.63bn and $1.65bn.