Zoom Communications Reports Third Quarter Financial Results
SAN JOSE, Calif., Nov. 25, 2024 — Zoom Communications, Inc. (NASDAQ: ZM), recently renamed from Zoom Video Communications, Inc., released its financial results for the third fiscal quarter ending October 31, 2024.
Key Financial Metrics
| Metric | Q3 FY2025 | Q3 FY2024 | Year-over-Year Change | Consensus Estimate | Performance vs. Estimate |
|---|---|---|---|---|---|
| Total Revenue | $1,177.5 million | Not Provided | Up 3.6% | $1.16 billion | Beat |
| EPS (Non-GAAP) | $1.38 | $1.29 | Up 7.0% | $1.31 | Beat |
| GAAP Net Income | $207.1 million | $141.2 million | Up 46.7% | Not Provided | N/A |
| GAAP EPS | $0.66 | $0.45 | Up 46.7% | Not Provided | N/A |
Interpretation: Zoom's solid revenue growth of 3.6% resulted in earnings per share surpassing consensus estimates. A notable increase in GAAP net income underscores improved profitability. The company's ability to outperform analyst expectations suggests effective cost management and operational efficiency.
Revenue Performance by Segment
| Segment | Q3 FY2025 Revenue | Year-over-Year Change |
|---|---|---|
| Enterprise | $698.9 million | Up 5.8% |
| Online | $478.7 million | Flat |
Interpretation: Enterprise revenue growth, which increased by 5.8%, indicates strong momentum in business solutions, while Online revenue remains stable. This suggests ongoing demand for enterprise services, contributing to overall revenue stability.
Key Developments & Operational Highlights
- Repurchased approximately 4.4 million shares during the third quarter.
- Increased stock repurchase authorization by $1.2 billion, with $2.0 billion still available.
- Introduced AI Companion 2.0 and customized paid AI add-ons at Zoomtopia.
- Achieved an all-time low online churn rate of 2.7%.
Comments from Company Officers
Eric S. Yuan, Zoom's founder and CEO, highlighted the company's vision to advance an AI-first work platform, aiming to empower customer capabilities. Yuan emphasized the successful enterprise revenue growth and significant customer engagements with major global enterprises as a testament to Zoom's competitive edge.
Stock Buyback Program
Zoom authorized an additional $1.2 billion for stock repurchase, totaling approximately $2.0 billion remaining. This program is designed to enhance shareholder value and is funded from working capital.
Forward Guidance
- Q4 FY2025: Revenue expected between $1.175 billion and $1.180 billion, with a non-GAAP EPS between $1.29 and $1.30.
- Full FY2025: Revenue projected between $4.656 billion and $4.661 billion, and non-GAAP EPS between $5.41 and $5.43.
Stock Price Movement
Following the release of the earnings report, Zoom's stock experienced a 3.67% increase, reflecting positive investor sentiment toward its financial performance and future prospects.
Zoom Communications continues to showcase robust financial health and strategic growth initiatives, maintaining its competitive position in the digital communications landscape.
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