A month has gone by since the last earnings report for Zoom Video Communications (ZM Quick QuoteZM - Free Report) . Shares have added about 7.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Zoom Video due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Zoom Q1 Earnings Beat, Customer Growth Drives Revenues

Zoom Video Communication’s first-quarter fiscal 2024 adjusted earnings of $1.16 per share beat the Zacks Consensus Estimate by 17.1% and increased 5.4% year over year.
Revenues of $1.10 billion beat the consensus mark by 2.01% and increased 13% year over year on strong growth from enterprise customers.

Quarter Details

Revenues from Enterprise customers grew 13% year over year and represented 57% of total revenues, up from 52% in first-quarter fiscal 2023. In the fiscal first quarter, customers contributing more than $100,000 in revenues in the trailing 12 months grew 23% to 3,580. These customers accounted for 29% of revenues, up from 24% in the year-ago quarter.

The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 112%.

The number of Enterprise customers grew 19% year over year to approximately 215,900. Zoom Phone surpassed 10% of revenues in the quarter for the first time. Emerging technologies, such as Zoom Contact Center picked up pace as customer experience teams recognized the value of modern and integrated collaboration solution.

Revenues increased 8% in America, while international market revenues from APAC declined 5% year over year. EMEA revenues decreased 8% year over year.

Operating Details

Non-GAAP gross margin expanded 190 basis points (bps) to 80.5% in the fiscal first quarter of 2024.

Research and development expenses increased 1.71% year over year to $106.2 million. Sales and marketing expenses increased 0.28% to $278.08 million, while general and administrative expenses decreased 1.08% to $83.5 million.

Non-GAAP operating income increased 5.6% to $422.3 million year over year. Non-GAAP operating margin expanded 99 bps to 38.2%.

Balance Sheet and Cash Flow

Total cash, cash equivalents and marketable securities as of Apr 30, 2023, was $5.6 billion. As of Jan 31, 2023, cash, cash equivalents and marketable securities were $5.41 billion.

Free cash flow as of Apr 30, 2023, was $396.7 million. As of Jan 31, 2023, adjusted free cash flow was $183.2 million.

Guidance

Zoom expects second-quarter fiscal 2024 revenues in the range of $1.110 billion to $1.115 billion.

Non-GAAP earnings per share are expected in the range of $1.04 to $1.06.

For fiscal 2024, Zoom expects revenues in the range of $4.465 billion to $4.485 billion.

Non-GAAP earnings per share are expected in the range of $4.25 to $4.31.


 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 70.37% due to these changes.

VGM Scores

At this time, Zoom Video has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Zoom Video has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Zoom Video is part of the Zacks Internet - Software industry. Over the past month, Twilio (TWLO Quick QuoteTWLO - Free Report) , a stock from the same industry, has gained 13.6%. The company reported its results for the quarter ended March 2023 more than a month ago.

Twilio reported revenues of $1.01 billion in the last reported quarter, representing a year-over-year change of +15%. EPS of $0.47 for the same period compares with $0 a year ago.

Twilio is expected to post earnings of $0.29 per share for the current quarter, representing a year-over-year change of +363.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.3%.

Twilio has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.