Zoom’s first-quarter revenue was $1.0738 billion, and net profit fell 50% year-on-year

Beijing time on May 24 news, video conferencing software developer Zoom today announced the company’s first quarter financial report for fiscal 2023. The report shows that Zoom’s total revenue in the first quarter was $1.0738 billion,A 12% increase from $956.2 million in the same period last year; net profit was $113.7 million,compared to $227.5 million in the same period last year; Net profit attributable to common stockholders of the company was $113.6 million, compared to $227.4 million attributable to common stockholders in the same period last year, down 50% year-on-year.

Zoom’s first-quarter results exceeded Wall Street analysts’ previous expectations, and the outlook for its second-quarter results also exceeded analysts’ expectations, pushing its shares up more than 6% after the market.

Performance Summary:

In the quarter ended April 30, 2022, Zoom’s net profit was $113.7 million, compared with $227.5 million in the same period last year; net income attributable to the company’s common stockholders was $113.6 million, compared to $113.6 million. The net profit attributable to common stockholders in the same period last year was $227.4 million, a decrease of 50% year-on-year; diluted earnings per share attributable to common stockholders of the company were $0.37, compared with the same period last year attributable to common stockholders of the company. Diluted earnings per share were $0.74.

Not in accordance with U.S. GAAP (excluding share-based award expenses and related payroll taxes, judicial settlement costs, losses on strategic investments, merger-related expenses, undistributed earnings attributable to participating securities, and tax effects), Zoom’s first-quarter adjusted net Profits were $315.8 million, or $1.03 per diluted share, compared to adjusted net income of $402.1 million, or $1.32 per diluted share, in the year-ago quarter, but still beat analysts previously expected. According to data provided by Yahoo Finance Channel, 24 analysts had expected Zoom’s first-quarter earnings per share to reach $0.87 on average.

Zoom’s total revenue in the first quarter was $1.0738 billion, up 12% from $956.2 million in the same period last year, and slightly exceeding analyst expectations. According to data provided by Yahoo Finance Channel, 23 analysts had expected Zoom’s first-quarter revenue to reach $1.07 billion on average.

Zoom’s cost of revenue in the first quarter was $262 million, compared with $265 million in the same period last year. Zoom’s first-quarter gross profit was $812 million, compared with $691 million in the same period last year.

Zoom’s operating expenses in the first quarter were $625 million, compared with $465 million in the same period last year. Among them, research and development expenses were $144 million, compared with $65.18 million in the same period last year; sales and marketing expenses were $363 million, compared with $246 million in the same period last year; general and administrative expenses were $118 million, compared with $118 million. This compares to $154 million in the same period last year.

Zoom’s first-quarter operating profit was $187 million, compared with $226 million in the same period last year. Ex-GAAP, which excludes share-based compensation expenses and related payroll taxes, judicial settlement charges, and M&A-related expenses, Zoom’s first-quarter adjusted operating profit was $399.6 million, compared to $400.9 million in the year-ago period .

According to US GAAP, Zoom’s operating profit margin in the first quarter was 17.4%. Not in accordance with GAAP, Zoom’s adjusted operating margin in the first quarter was 37.2%.

Executive comments:

“During the first quarter, we launched Zoom Contact Center, Zoom Whiteboard and Zoom IQ for Sales, demonstrating our continued focus on enhancing the customer experience and facilitating hybrid work. We believe these innovative solutions will further expand our future market opportunities for growth and customer expansion,” said Yuan Zheng, founder and CEO of Zoom. “Furthermore, in the first quarter, we generated over $1 billion in revenue, driven by the continued success of our Enterprise Services, Zoom Rooms and Zoom Phone, which reached 3 million ‘seats’ during the quarter We also maintained strong profitability and cash flow, with a GAAP operating margin of 17%, a non-GAAP operating margin of around 37%, and an operating cash flow margin of 49% around 46% adjusted free cash flow margin.”

Customer metrics:

Drivers of total revenue include new customer acquisition and expansion of existing customer base. As of the end of the first quarter of fiscal 2023, Zoom has:

– About 198,900 Enterprise Edition service customers, an increase of 24% compared to the same period last year;

– 123% net dollar expansion rate for Enterprise Edition service customers over the past 12 months;

– 2,916 customers contributed more than $100,000 in revenue in the past 12 months, an increase of approximately 46% compared to the same period last year;

Cash related news:

Zoom’s net cash from operating activities in the first quarter was $526.2 million, compared with $533.3 million in the same period last year. Zoom’s first-quarter adjusted free cash flow (defined as net cash from operating activities less purchases of property and equipment, plus judicial settlement costs) was $501.1 million, compared to $454.2 million in the same period last year.

As of April 30, 2022, Zoom held $5.7 billion in cash, cash equivalents and marketable securities.

Performance Outlook:

Zoom expects total net revenue in the second quarter of fiscal 2023 to be between $1.115 billion and $1.120 billion, exceeding analyst expectations; non-GAAP operating profit is expected to reach $360 million to $365 million between $0.90 and $0.92 per diluted share on a non-GAAP basis (weighted average total shares outstanding of approximately 308 million shares), also beating analysts’ expectations. According to data provided by Yahoo Finance Channel, 24 analysts had expected Zoom’s second-quarter earnings per share to reach $0.88, and 22 analysts had expected Zoom’s second-quarter revenue to reach $1.11 billion.

Zoom also expects total net revenue in fiscal 2023 to be between $4.530 billion and $4.550 billion, with the average ($4.540 billion) missing analyst expectations; non-GAAP operating profit is expected to reach $4.55 billion. Between $1.480 billion and $1.500 billion; non-GAAP earnings per diluted share are expected to be between $3.70 and $3.77, beating analyst expectations. According to data provided by Yahoo Finance Channel, 29 analysts had expected Zoom’s full-year earnings per share to reach $3.53, and 29 analysts had expected Zoom’s full-year revenue to reach $4.55 billion.

Share price reaction:

On the same day, Zoom’s shares fell $0.41 in regular Nasdaq trading to close at $89.33, or 0.46%. In subsequent after-hours trading as of 5:33 p.m. ET on Monday (5:33 a.m. Beijing time on Tuesday), Zoom shares rose $5.60, or 6.27%, to $94.93. In the past 52 weeks, Zoom’s highest price was $406.48 and its lowest price was $79.03.