Zoom shares spike over 30% on spectacular earnings
Zoom Video Communications raised its forecast for the full year after reporting much higher than expected second-quarter results. The company’s revenues leapt 355 per cent from the year before to USD 663.5 million, the operating profit increased to USD 188.1 million from 2.3 million, and the adjusted operating profit rose to USD 277 million forms 20.7 million.
As a result, Yuan said the company now sees FY revenues advancing 284 percent to USD 2.39 billion, from its original forecast of USD 2.37 billion, up 281 percent, an adjusted operating profit of 730-750 million and adjusted EPS at USD 2.40-2.47.
Second Quarter Fiscal Year 2021 Financial Highlights:
- Revenue: Total revenue for the quarter was $663.5 million, up 355% year-over-year.
- Income from Operations and Operating Margin: GAAP income from operations for the quarter was $188.1 million, compared to $2.3 million in the second quarter of the fiscal year 2020. After adjusting for stock-based compensation expense and related payroll taxes, expenses related to the charitable donation of common stock, and acquisition-related expenses, non-GAAP income from operations for the second quarter was $277.0 million, up from $20.7 million in the second quarter of the fiscal year 2020. For the second quarter, GAAP operating margin was 28.3% and non-GAAP operating margin was 41.7%.
- Net Income and Net Income Per Share: GAAP net income attributable to common stockholders for the quarter was $185.7 million, or $0.63 per share, compared to GAAP net income attributable to common stockholders of $5.5 million, or $0.02 per share in the second quarter of the fiscal year 2020.
- Cash: Total cash, cash equivalents, and marketable securities as of July 31, 2020, was $1.5 billion.
- Cash Flow: Net cash provided by operating activities was $401.3 million for the quarter, compared to $31.2 million in the second quarter of the fiscal year 2020. Free cash flow was $373.4 million, compared to $17.1 million in the second quarter of the fiscal year 2020.
- The net profit jumped to USD 185.7 million or USD 0.63 per share, from 5.5 million and 0.02 per share, with the adjusted net profit leaping to USD 274.8 million or USD 0.82 per share, from 24 million and 0.08 per share. CEO Eric Yuan attributed the strong growth to new customers, with companies moving from their immediate business needs to support a future of working, learning and connecting anywhere on Zoom’s platform.
Drivers of total revenue include acquiring new customers and expanding across existing customers. At the end of the second quarter of the fiscal year 2021, Zoom had:
- Approximately 370,200 customers with more than 10 employees, up approximately 458% from the same quarter last fiscal year.
- 988 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 112% from the same quarter last fiscal year.
- A trailing 12-month net dollar expansion rate in customers with more than 10 employees above 130% for the 9th consecutive quarter.
Free cash flow lifted to USD 401.3 million from USD 31.2 million the year earlier, with cash and cash equivalents going to USD 1.5 billion.
Looking towards the next quarter, Zoom is guiding for fiscal third-quarter revenues of USD 685-690 million, and adjusted operating profit of USD 225-230 million, and adjusted EPS of USD 0.73-0.74.
Shares of Zoom Video Communication were trading over 30% higher in pre-market today after posting better-than-expected results in the fiscal second quarter of 2021. Zoom shares have gained 369% year to date eclipsing a 9% rise in the S&P 500.
“Organizations are shifting from addressing their immediate business continuity needs to support a future of working anywhere, learning anywhere, and connecting anywhere on Zoom’s video-first platform. At Zoom, we strive to deliver a world-class, frictionless, and secure communication experience for our customers across locations, devices, and use cases,” said Zoom founder and CEO, Eric S. Yuan. “Our ability to keep people around the world connected, coupled with our strong execution, led to revenue growth of 355% year-over-year in Q2 and enabled us to increase our revenue outlook to approximately $2.37 billion to $2.39 billion for FY21, or 281% to 284% increase year-over-year.”