Zoom Video Communications, Inc. (NASDAQ: ZM), a provider of video-first unified communications, today announced financial results for the quarter ended April 30, 2020. In an earnings report today, Zoom reported making $328 million in revenue during its February–April quarter.
That’s up far more than double from the same time last year, when it made $122 million, and it comes in well above the $200 million that Zoom expected it would make when it issued guidance just a few months ago.
“We were humbled by the accelerated adoption of the Zoom platform around the globe in Q1. The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives,” said Eric S. Yuan, Founder and Chief Executive Officer of Zoom. “I am proud of our Zoom employees who dedicated themselves to support customers and the global community during this crisis. With their tremendous efforts, we were able to provide high-quality video services to new and existing customers.
Yuan added, “We also supported an unprecedented number of free participants, including over 100,000 K-12 schools around the globe that chose Zoom to deliver the best online education experience. This quarter, we were also proud to launch Zoom Cares, our corporate philanthropic entity, with initial grants to San Jose Digital Inclusion Fund, Destination Home, the CDC Foundation, the World Health Organization and the CDE Foundation. While the key long-term focuses of this foundation are education, climate change, and social equity, our primary grants in Q1 were toward organizations making a difference during COVID-19.”
First Quarter Fiscal Year 2021 Financial Highlights:
- Revenue: Total revenue for the quarter was $328.2 million, up 169% year-over-year.
- Income from Operations and Operating Margin: GAAP income from operations for the quarter was $23.4 million, compared to GAAP income from operations of $1.6 million in the first quarter of fiscal year 2020. After adjusting for stock-based compensation expense and related payroll taxes and expenses related to charitable donation of common stock, non-GAAP income from operations for the first quarter was $54.6 million, up from $8.2 million in the first quarter of fiscal year 2020. For the first quarter, GAAP operating margin was 7.1% and non-GAAP operating margin was 16.6%.
- Net Income and Net Income Per Share: GAAP net income attributable to common stockholders for the quarter was $27.0 million, or $0.09 per share, compared to GAAP net income attributable to common stockholders of $0.2 million, or $0.00 per share in the first quarter of fiscal year 2020.
Non-GAAP net income for the quarter was $58.3 million, after adjusting for stock-based compensation expense and related payroll taxes, expenses related to charitable donation of common stock, and undistributed earnings attributable to participating securities. Non-GAAP net income per share was $0.20. In the first quarter of fiscal year 2020, non-GAAP net income was $8.9 million, or $0.03 per share. The non-GAAP weighted average share count for the first quarter of fiscal year 2020 has been adjusted to reflect the shares of Class A common stock issued in connection with the Initial Public Offering (“IPO”), including the concurrent private placement, that are outstanding as of the end of the period as if they were outstanding as of the beginning of the period for comparability. - Cash: Total cash, cash equivalents, and marketable securities as of April 30, 2020 was $1.1 billion.
- Cash Flow: Net cash provided by operating activities was $259.0 million for the quarter, compared to $22.2 million in the first quarter of fiscal year 2020. Free cash flow was $251.7 million, compared to $15.3 million in the first quarter of fiscal year 2020.
Customer Metrics: Drivers of total revenue include acquiring new customers and expanding across existing customers. At the end of the first quarter of fiscal year 2021, Zoom had:
- Approximately 265,400 customers with more than 10 employees, up approximately 354% from the same quarter last fiscal year.
- 769 customers contributing more than $100,000 in trailing 12 months revenue, up approximately 90% 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 8th consecutive quarter.
Financial Outlook: Zoom is providing the following guidance for its second quarter fiscal year 2021 and its full fiscal year 2021.
- Second Quarter Fiscal Year 2021: Total revenue is expected to be between $495.0 million and $500.0 million and non-GAAP income from operations is expected to be between $130.0 million and $135.0 million. Non-GAAP diluted EPS is expected to be between $0.44 and $0.46 with approximately 299 million non-GAAP weighted average shares outstanding.
- Full Fiscal Year 2021: Total revenue is expected to be between $1.775 billion and $1.800 billion. This revenue outlook takes into consideration the demand for remote work solutions for businesses. It also assumed increased churn in the second half of the fiscal year when compared to historic churn levels due to a higher percentage of customers who purchased monthly subscriptions in the first quarter. Non-GAAP income from operations is expected to be between $355.0 million and $380.0 million. Non-GAAP diluted EPS is expected to be between $1.21 and $1.29 with approximately 300 million non-GAAP weighted average shares outstanding.
Zoom’s stock has tripled in value over the last several months, surging to around $200 before earnings today, up from around $68 at the beginning of the year. The company went public in April 2019 for $36 per share.
