Core Viewpoint - Zoom Video Communications reported financial results for its fiscal third quarter of 2025, which beat expectations but led to a decline in stock price as investors took profits after a significant rise in stock value [1][2][3]. Financial Performance - Zoom's Q3 revenue increased by 3.6% year over year, and the company raised its full-year revenue guidance from $4.630 billion to $4.640 billion to a new range of $4.656 billion to $4.661 billion [3][4]. - The adjusted earnings per share (EPS) guidance was also raised from a previous range of $5.29 to $5.31 to a new range of $5.41 to $5.43 [4]. Cash Position and Shareholder Returns - The company holds $7.7 billion in cash, cash equivalents, and marketable securities, and is projected to generate approximately $1.6 billion in full-year free cash flow [5]. - Zoom has initiated a total buyback plan of about $2 billion, having already repurchased 4.4 million shares in Q3 [5][6]. Stock-Based Compensation Impact - Despite the buyback efforts, the outstanding share count increased due to stock-based compensation, which is a factor affecting the stock's performance [6].

Financial Performance - The company reported a revenue of $X million for the three months ended October 31, 2024, representing a Y% increase compared to the same period in 2023[7] - The company anticipates a revenue growth rate of B% for the next quarter, driven by the launch of new products and enhancements to existing services[9] - The gross profit margin improved to H%, reflecting better cost management and operational efficiencies[13] - Cash flow from operations for the nine months ended October 31, 2024, was J million, providing a solid foundation for future investments[15] - The company has experienced fluctuations in revenue growth rates, which may continue to decline in future periods[12] - The company has incurred net losses in the past, with no assurances of maintaining or increasing profitability in the future[12] User Engagement and Growth - User growth reached Z million, with a retention rate of A%, indicating strong customer loyalty and engagement[8] - The company is focusing on enhancing the security and privacy of its platform, which is critical for customer retention and attraction[12] Market Expansion and Strategy - The company plans to expand its market presence in regions D and E, targeting a market share increase of F% by the end of the fiscal year[11] - A strategic acquisition was completed, expected to contribute an additional G million in annual revenue starting next quarter[12] - The company has identified new market opportunities in the collaboration technology sector, projecting a potential revenue increase of I million over the next two years[14] Research and Development - Investment in R&D increased by C%, focusing on the development of an enhanced version of the AI Companion technology[10] - The company is investing in new technology, including an enhanced version of AI Companion, to improve its product offerings[9] Risk Management and Compliance - The company is actively addressing cybersecurity risks, with a budget increase of K% allocated to enhance security measures and compliance[16] - The company is subject to various regulatory requirements, and any failure to comply could result in significant fines and liabilities[12] - The company utilizes generative AI in its products, which may introduce operational challenges and regulatory concerns[15] Competitive Landscape - The company faces significant competition in the market, with competitors having advantages such as greater name recognition and larger marketing budgets[12] - The company generates revenue primarily from subscription sales, and any decline in demand for its platform could adversely affect its business[12] - The company is experiencing longer sales cycles as it increases sales to large organizations, which may lead to deployment challenges[12] International Operations - The company is expanding its operations outside the United States, which may expose it to increased business and regulatory risks[12]

Zoom Stock Falls After Earnings. Now Might Be the Time to Buy. ...

Group 1 - Michael Wiggins De Oliveira is an inflection investor, focusing on buying undervalued companies at pivotal moments when their profitability is expected to increase significantly over the next year [1] - The investment strategy emphasizes technology and the Great Energy Transition, including uranium, with a concentrated portfolio of approximately 15 to 20 stocks and an average holding period of 18 months [1] - Michael has over 10 years of experience analyzing companies in the tech and energy sectors, and has built a following of over 40,000 on Seeking Alpha [2] Group 2 - Michael leads the investing group Deep Value Returns, which offers insights through a concentrated portfolio of value stocks, timely updates on stock picks, and a weekly webinar for live advice [3] - The Deep Value Returns community is described as active, vibrant, and supportive, providing accessible chat options for both new and experienced investors [3]

Financial Data and Key Metrics - Total revenue grew approximately 4% YoY to $1.178 billion, exceeding guidance by $13 million [24] - Enterprise revenue grew 6% YoY, now representing 59% of total revenue, up 1 point YoY [24] - Average Monthly Churn decreased to 2.7%, down 30 basis points YoY, the lowest ever reported [25] - Non-GAAP gross margin was 78.9%, down from 79.7% YoY, primarily due to AI investments [27] - Non-GAAP operating income was $458 million, exceeding guidance, with a 38.9% operating margin [28] - Non-GAAP diluted EPS was $1.38, $0.07 above guidance and $0.09 higher than Q3 last year [29] - Deferred revenue grew 5% YoY to $1.38 billion, with RPO increasing 5% YoY to $3.74 billion [30] Business Line Performance - Zoom AI Companion Monthly Active Users grew 59% QoQ [23] - Workvivo customers grew 72% YoY, driven by the Meta partnership [23] - Zoom Contact Center customers surpassed 1,250, up 82% YoY [23] - Enterprise customers contributing over $100,000 in TTM revenue grew 7% YoY, now representing 31% of revenue [25] Market Performance - Americas revenue grew 4% YoY, EMEA grew 5%, and APAC was flat [26] - On a constant currency basis, EMEA grew 3% and APAC grew 2% YoY [26] Strategy and Industry Competition - The company unveiled its new vision as an AI-first Work Platform for Human Connection, extending its strengths in unified communication and collaboration [7] - AI Companion 2.0 was released, showcasing innovation and customer obsession, with features like Meeting Summary and Smart Compose [9] - Custom AI Companion add-ons for Healthcare and Education were announced, aiming to meet specific industry needs [13] - Zoom Workplace for Frontline was introduced, targeting industries like retail, healthcare, and manufacturing [14] - Contact Center and Workvivo are key pillars of the strategy, with significant traction in both areas [15] Management Commentary on Operating Environment and Future Outlook - The company expects Q4 revenue to be in the range of $1.175 billion to $1.18 billion, representing approximately 2.7% YoY growth [31] - Full-year FY25 revenue is expected to be in the range of $4.656 billion to $4.661 billion, representing approximately 2.9% YoY growth [32] - The company raised its top-line and profitability outlook for FY25, with non-GAAP operating income expected to be in the range of $1.813 billion to $1.818 billion [32] - The Board authorized an incremental $1.2 billion share repurchase, bringing total unexecuted buy-back to approximately $2 billion [33] Other Important Information - The company announced a new corporate name: Zoom Communications, Inc., reflecting its evolution into an AI-first work platform [21] - The company highlighted significant customer wins, including a 20,000-seat Contact Center deal with Spain's national revenue service [17] - Integration with ServiceNow's Now Assist was deepened to bolster Generative AI product offerings [18] Q&A Session Question: Customer interest in AI and roadmap - Customers are highly interested in AI, with over 4 million accounts already enabled with AI Companion [37] - Feedback on AI Companion 2.0 was extremely positive, with customers appreciating the innovation and no additional cost [37] Question: Budget allocation for AI and macroeconomic outlook - Companies are allocating budgets for AI differently, with some consolidating into existing vendors and others shifting budgets from other areas [43] - The macroeconomic environment is improving, but it is too early to tell the full impact on spending [46] Question: Factors driving the 20,000-seat Contact Center deal - The deal was driven by trust in Zoom's scalable architecture, feature set, and pace of innovation [51] - The company's ability to support large deployments from day one was a key differentiator [52] Question: CFO's perspective on the job and future outlook - The CFO is focused on accelerating top-line growth, managing margins, and capital allocation [61] - The company will provide FY26 guidance in the next earnings call [61] Question: AI investments and impact on gross margins - AI investments are focused on back-end infrastructure, Workplace platform, and Contact Center features [66] - The company expects to monetize AI through customized AI Companion and Contact Center offerings [67] Question: Monetization opportunities for AI - AI monetization is already happening through Contact Center and Revenue Accelerator, with more opportunities expected in the second half of next year [76] - Customized AI Companion and AI Companion Studio will be available in the first half of next year, offering monetization potential [77] Question: Growth drivers for next year - The foundation of Zoom's growth is the meetings platform, with emerging products like Contact Center and Workvivo driving future growth [84] - International growth, channel expansion, and up-market opportunities are additional growth vectors [86] Question: Deferred revenue growth and conservatism in guidance - Deferred revenue growth was driven by tightening discounting and lengthening billing terms, with similar dynamics expected in Q4 [90] - Revenue is considered a better measure of business performance than deferred revenue [93] Question: Market strategy and importance of price - The company's strategy is based on better product, better price, and better service, with a focus on building long-term trust [96] - The platform approach and AI at no additional cost are key differentiators [98] Question: Workvivo growth and Meta partnership - Workvivo growth is driven by the Meta partnership, with strong pipeline and momentum [105] - The company is focused on innovating and growing the Workvivo business [106] Question: Path to long-term operating margins - The company is investing in AI, emerging growth businesses, and the platform, with a disciplined approach to expenses [112] - Long-term margin guidance is lower than current levels due to these investments [113] Question: Customer interest in integrating data into AI Companion - Customers are showing strong interest in integrating internal data into AI Companion, driving monetization and product stickiness [120] - The company's open platform approach and competitive pricing are key differentiators [123]

Core Insights - Zoom Video Communications reported $1.18 billion in revenue for the quarter ended October 2024, a year-over-year increase of 3.6% [1] - The EPS for the same period was $1.38, compared to $1.29 a year ago, with a surprise of +5.34% against the consensus estimate of $1.31 [1] Financial Performance Metrics - The number of enterprise customers was 192,400, slightly below the average estimate of 196,459 [3] - Customers generating over $100K in TTM revenue totaled 3,995, compared to the average estimate of 4,042 [3] - Remaining Performance Obligations (RPO) stood at $3.74 billion, slightly below the estimated $3.76 billion [3] - Current RPO was reported at $2.28 billion, exceeding the average estimate of $2.19 billion [3] - Non-Current RPO was $1.46 billion, below the average estimate of $1.55 billion [3] Stock Performance - Shares of Zoom Video have returned +18.2% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [4]

Zoom Communications Q3 FY25 Earnings November 25, 2024 | --- | --- | |-----------------------------|-------| | | | | | | | Use of non-GAAP financial | | | measures | | In addition to the financials presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this presentation includes the following non-GAAP metrics: Revenue in Constant Currency, non-GAAP gross profit, non-GAAP gross margin, non-GAAP R&D expense, non-GAAP S&M expense, non-GAAP G&A expense, non-GAAP operating margin, n ...

Core Insights - Zoom reported strong fiscal third-quarter results, with earnings per share and revenue exceeding expectations, but shares fell about 1% in after-hours trading [1][2]. Financial Performance - Adjusted earnings per share were $1.38, surpassing the expected $1.31, while revenue reached $1.18 billion, above the anticipated $1.16 billion [2]. - Year-over-year revenue growth was approximately 4%, marking a significant slowdown compared to the tripling of business size during the pandemic in 2020 and 2021 [2]. - Net income increased to $207.1 million, or 66 cents per share, compared to $141.2 million, or 45 cents per share, in the same quarter the previous year [3]. Customer Metrics - The company reported 192,400 enterprise customers, an increase of 800 from the previous quarter [4]. Future Guidance - For the fiscal fourth quarter, Zoom expects adjusted earnings per share between $1.29 and $1.30, with revenue projected between $1.175 billion and $1.180 billion, aligning with analyst expectations [4]. - For the 2025 fiscal year, Zoom raised its guidance to adjusted earnings per share of $5.41 to $5.43 and revenue of $4.656 billion to $4.661 billion, indicating about 3% growth [5]. Product Developments - In the first half of 2025, Zoom plans to release a premium Custom AI Companion that integrates with corporate services like ServiceNow and Workday, and has introduced single-use webinar options for up to 1 million attendees [6]. Stock Performance - As of the latest close, Zoom's stock has risen approximately 24% this year, compared to a 25% gain in the S&P 500 index [7].

Financial Performance - Total revenue for Q3 2025 was $1,177.5 million, reflecting a year-over-year increase of 3.6% [1][3] - Enterprise revenue reached $698.9 million, up 5.8% year-over-year [1][3] - GAAP operating margin was 15.5%, while non-GAAP operating margin stood at 38.9% [3][34] - GAAP net income for the quarter was $207.1 million, or $0.66 per share, compared to $141.2 million, or $0.45 per share, in the same quarter last year [3][34] Customer Metrics - The number of customers contributing more than $100,000 in trailing 12 months revenue increased by 7.1% year-over-year, totaling 3,995 [4] - Zoom had approximately 192,400 Enterprise customers, with a trailing 12-month net dollar expansion rate of 98% [4] Cash Flow and Stock Repurchase - Net cash provided by operating activities was $483.2 million, down 2.0% year-over-year [3][35] - Free cash flow for the quarter was $457.7 million, up 1.0% year-over-year [3][35] - The company repurchased approximately 4.4 million shares of common stock in Q3 and increased total common stock repurchase authorization by $1.2 billion, with approximately $2.0 billion remaining to be repurchased [1][9] Future Guidance - For Q4 2025, total revenue is expected to be between $1.175 billion and $1.180 billion, with non-GAAP income from operations projected between $443.0 million and $448.0 million [6] - For the full fiscal year 2025, total revenue is anticipated to be between $4.656 billion and $4.661 billion, with non-GAAP income from operations expected between $1.813 billion and $1.818 billion [6]

This account is managed by Noah's Arc Capital Management. Our goal is provide Wall Street level insights to main street investors. Our research focus is mainly on 20th century stocks (old economy) undergoing a 21st century transformation, but occasionally we'll write on companies that help transform 20th century firms as well. We look for innovations in a business model that will cause a stock to change dramatically. Associated with SA contributors Thomas Potter and Elijah Buell.Analyst’s Disclosure: I/we h ...