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Zoom Video (ZM) Up 9.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Zoom Video Communications (ZM - Free Report) . Shares have added about 9.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Zoom’s third-quarter fiscal 2024 adjusted earnings of $1.29 per share beat the Zacks Consensus Estimate by 19.44% and increased 20.6% year over year.
Revenues of $1.13 billion beat the consensus mark by 1.66% and increased 3.2% year over year on strong growth from Enterprise customers.
Quarter Details
Revenues from Enterprise customers grew 7.5% year over year to $660.6 million and represented 58% of total revenues. Customers contributing more than $100,000 in revenues in the trailing 12 months grew 13.5% to 3,731. These customers accounted for 29% of revenues, up from 27% in the year-ago quarter.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 105%.
The number of Enterprise customers grew 5% year over year to more than 219,700.
Zoom Phone reached approximately seven million paid seats. Zoom Contact Center reached approximately 700 customers as of quarter-end, while Zoom Virtual Agent customers nearly doubled quarter over quarter. The number of customers on Zoom One bundles that include Zoom Phone grew approximately 330% year over year.
Revenues increased 5.2% in America, while international market revenues from APAC and EMEA decreased 2.2% and 1.4% year over year, respectively.
Non-GAAP Operating Details
Gross margin expanded 20 basis points (bps) to 79.7% in the fiscal third quarter of 2024.
Research and development expenses decreased 2% year over year to $105.7 million. Sales and marketing expenses decreased 5.6% to $283.8 million, while general and administrative expenses decreased 19.7% to $69.8 million.
Operating income increased 17.4% to $447.1 million year over year. Operating margin expanded 480 bps to 39.3%.
Balance Sheet
Total cash, cash equivalents and marketable securities as of Oct 31, 2023, were $6.49 billion. As of Jun 31, 2023, cash, cash equivalents and marketable securities were $6 billion.
Free cash flow as of Oct 31, 2023, was $453.2 million. As of Jul 31, 2023, free cash flow was $289.4 million.
Guidance
Zoom expects fourth-quarter fiscal 2024 revenues in the range of $1.125 billion to $1.13 billion.
Non-GAAP earnings per share are expected in the range of $1.13 to $1.15.
For fiscal 2024, Zoom expects revenues in the range of $4.506-$4.511 billion.
Non-GAAP earnings per share are expected in the range of $4.93 to $4.95.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 19.03% due to these changes.
VGM Scores
Currently, Zoom Video has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Zoom Video has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Zoom Video belongs to the Zacks Internet - Software industry. Another stock from the same industry, Palo Alto Networks (PANW - Free Report) , has gained 16.9% over the past month. More than a month has passed since the company reported results for the quarter ended October 2023.
Palo Alto reported revenues of $1.88 billion in the last reported quarter, representing a year-over-year change of +20.1%. EPS of $1.38 for the same period compares with $0.83 a year ago.
For the current quarter, Palo Alto is expected to post earnings of $1.30 per share, indicating a change of +23.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.1% over the last 30 days.
Palo Alto has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Zoom Video (ZM) Up 9.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Zoom Video Communications (ZM - Free Report) . Shares have added about 9.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Zoom Q3 Earnings Beat, Customer Growth Drives Revenues
Zoom’s third-quarter fiscal 2024 adjusted earnings of $1.29 per share beat the Zacks Consensus Estimate by 19.44% and increased 20.6% year over year.
Revenues of $1.13 billion beat the consensus mark by 1.66% and increased 3.2% year over year on strong growth from Enterprise customers.
Quarter Details
Revenues from Enterprise customers grew 7.5% year over year to $660.6 million and represented 58% of total revenues. Customers contributing more than $100,000 in revenues in the trailing 12 months grew 13.5% to 3,731. These customers accounted for 29% of revenues, up from 27% in the year-ago quarter.
The company reported a trailing 12-month net dollar expansion rate for Enterprise customers of 105%.
The number of Enterprise customers grew 5% year over year to more than 219,700.
Zoom Phone reached approximately seven million paid seats. Zoom Contact Center reached approximately 700 customers as of quarter-end, while Zoom Virtual Agent customers nearly doubled quarter over quarter. The number of customers on Zoom One bundles that include Zoom Phone grew approximately 330% year over year.
Revenues increased 5.2% in America, while international market revenues from APAC and EMEA decreased 2.2% and 1.4% year over year, respectively.
Non-GAAP Operating Details
Gross margin expanded 20 basis points (bps) to 79.7% in the fiscal third quarter of 2024.
Research and development expenses decreased 2% year over year to $105.7 million. Sales and marketing expenses decreased 5.6% to $283.8 million, while general and administrative expenses decreased 19.7% to $69.8 million.
Operating income increased 17.4% to $447.1 million year over year. Operating margin expanded 480 bps to 39.3%.
Balance Sheet
Total cash, cash equivalents and marketable securities as of Oct 31, 2023, were $6.49 billion. As of Jun 31, 2023, cash, cash equivalents and marketable securities were $6 billion.
Free cash flow as of Oct 31, 2023, was $453.2 million. As of Jul 31, 2023, free cash flow was $289.4 million.
Guidance
Zoom expects fourth-quarter fiscal 2024 revenues in the range of $1.125 billion to $1.13 billion.
Non-GAAP earnings per share are expected in the range of $1.13 to $1.15.
For fiscal 2024, Zoom expects revenues in the range of $4.506-$4.511 billion.
Non-GAAP earnings per share are expected in the range of $4.93 to $4.95.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 19.03% due to these changes.
VGM Scores
Currently, Zoom Video has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Zoom Video has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Zoom Video belongs to the Zacks Internet - Software industry. Another stock from the same industry, Palo Alto Networks (PANW - Free Report) , has gained 16.9% over the past month. More than a month has passed since the company reported results for the quarter ended October 2023.
Palo Alto reported revenues of $1.88 billion in the last reported quarter, representing a year-over-year change of +20.1%. EPS of $1.38 for the same period compares with $0.83 a year ago.
For the current quarter, Palo Alto is expected to post earnings of $1.30 per share, indicating a change of +23.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.1% over the last 30 days.
Palo Alto has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.