Wall Street may be anticipating that workers will become less reliant on Zoom calls as Covid-19 vaccines are rolled out, but the videoconferencing start-up still turned in a surprisingly strong performance in the last quarter and predicted faster growth in the coming year.
The news sent Zoom’s shares up as much as 10 per cent in after-market trading on Monday, valuing the company at $131bn. That is still more than 20 per cent below a high in October, before investors started to look ahead to an easing of pandemic restrictions.
Eric Yuan, chief executive, said Zoom was racing to diversify to capitalise on the huge audience drawn to its videoconferencing service last year. In a call with Wall Street analysts, he claimed Zoom was moving from being “a killer app company to a platform company”, supporting a wider range of communications services.
“I think to become a platform company will become a great opportunity for us,” Yuan said. “We’re not only a videoconferencing company any more.”
For the latest quarter, however, its fortunes were heavily dependent on the app that has made it a household name. Revenues soared to $883m in the three months to the end of January, up from $188m the year before, and 9 per cent above most analysts’ expectations. The company said it had 467,100 customers with more than 10 employees, almost five times as many as before the pandemic.
Despite predictions that its service would play a less central role in the lives of many workers and students in 2021, Zoom said it expected revenues for its next fiscal year to grow as much as 43 per cent, to $3.76bn-$3.78bn, compared with Wall Street projections of about $3.5bn.
One factor boosting growth has been a stabilisation in the rate of customer churn, which had risen rapidly last year as many smaller customers were drawn to the service. Kelly Steckelberg, chief financial officer, said the pace at which users return to offices was one factor that made it hard to predict customer churn in 2021, though she added that the company expected it to remain at current levels.
Zoom’s pro forma earnings per share — struck after deducting stock compensation expenses — rose to $1.22 from 15 cents the year before, and were 43 cents above expectations. Based on formal accounting rules, Zoom’s net income rose from $15m to $260m, or 87 cents a share.
It also predicted pro forma earnings per share for its current fiscal year of between $3.59 and $3.65, higher than the $2.96 a share analysts had pencilled in.
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