Earnings Summary Zoom Video Communications Inc Q2 Fiscal Year 2025
Intellectia.AI Updated: 2024-08-21
Earnings Summary: Zoom Video Communications, Inc. - Q2 Fiscal Year 2025
Zoom Video Communications, Inc. (NASDAQ: ZM) reported its financial results for the second fiscal quarter ended July 31, 2024.
Consolidated Financial Metrics
| Metric | Q2 FY2025 | Q2 FY2024 | YoY Change | Consensus Estimates | Beat/Miss |
|---|---|---|---|---|---|
| Total Revenue | $1,162.5M | $1,138.5M | +2.1% | $1,150M | Beat |
| Revenue (Constant Currency) | $1,166.1M | - | +2.4% | - | - |
| GAAP EPS | $0.70 | $0.59 | +18.6% | - | - |
| Non-GAAP EPS | $1.39 | $1.34 | +3.7% | $1.21 | Beat |
| GAAP Operating Margin | 17.4% | - | - | - | - |
| Non-GAAP Operating Margin | 39.2% | - | - | - | - |
| Operating Cash Flow | $449.3M | $336.0M | +33.7% | - | - |
| Free Cash Flow | $365.1M | $289.4M | +26.2% | - | - |
Interpretation: Zoom reported robust financial performance in Q2 FY2025, with total revenue of $1,162.5 million exceeding the consensus estimate of $1,150 million. Earnings per share on a non-GAAP basis were $1.39, much higher than the expected $1.21. The company exhibited strong operating cash flow growth, up 33.7% year-over-year, showcasing operational efficiency.
Segment Revenue Performance
| Segment | Q2 FY2025 Revenue | Q2 FY2024 Revenue | YoY Change |
|---|---|---|---|
| Enterprise | $682.8M | - | +3.5% |
| Online | $479.7M | - | Flat |
Interpretation: Revenue from the Enterprise segment grew by 3.5% year-over-year, indicating strength in large accounts. The Online segment remained stable year-over-year, suggesting sustained demand from smaller businesses and individual users.
Operational Data
| Metric | Q2 FY2025 | Q2 FY2024 | YoY Change |
|---|---|---|---|
| Customers contributing >$100K in TTM | 3,933 | ~3,673 | +7.1% |
| Enterprise customers | ~191,600 | - | - |
| Online average monthly churn | 2.9% | 3.2% | -30 bps |
| Percentage of total Online MRR (≥16 months) | 74.4% | 72.8% | +160 bps |
Summary of Comments: Eric S. Yuan, Zoom's founder and CEO, noted the company's broad-based outperformance and efficient growth demonstrated by substantial improvements in operating cash flow and free cash flow. Yuan highlighted growth in large accounts and marked resilience in the Online business, citing the lowest average monthly churn rate ever achieved for the segment. He also emphasized the success of Zoom Contact Center in securing significant orders.
Share Repurchase Program
- Repurchased: Approximately 4.8 million shares of common stock in Q2.
- Remaining Authorized Repurchase: $1.062 billion.
Forward Guidance
Q3 FY2025: - Total Revenue: $1.160B - $1.165B - Revenue in Constant Currency: $1.162B - $1.167B - Non-GAAP Operating Income: $438.0M - $443.0M - Non-GAAP Diluted EPS: $1.29 - $1.31 - Shares Outstanding: ~314 million
Full FY2025: - Total Revenue: $4.630B - $4.640B - Revenue in Constant Currency: $4.641B - $4.651B - Non-GAAP Operating Income: $1.790B - $1.800B - Non-GAAP Diluted EPS: $5.29 - $5.32 - Free Cash Flow: $1.580B - $1.620B - Shares Outstanding: ~316 million
Stock Price Movement
Following the earnings release, Zoom's stock price increased by approximately 6.33%.
Conclusion
Zoom's Q2 FY2025 financial performance surpassed expectations, driven by growth in enterprise revenue and efficient cash flow management. The company's solid forward guidance reflects confidence in sustained growth and operational discipline, while strategic share repurchases aim to enhance shareholder value.
