Zoom Foresees Robust Growth Even as Pandemic Pressures Ease -- Update
By Maria Armental
Zoom Video Communications Inc. said its growth would continue at
a rapid pace amid the vaccine rollout, after pandemic lockdowns
turned the company into a household name and an investor
The videoconferencing company said Monday that revenue this year
would rise more than 41% after more than quadrupling to $2.65
billion in the fiscal year ended in January. The sharp growth
during last year repeatedly outpaced Zoom's own projections, and
the latest result beat a forecast issued in November.
Zoom's share price, which more than tripled over the past 12
months, was ahead nearly 10% in after-hours trading Monday after
gaining by a similar margin to finish at $409.66 during the day's
Although Zoom made its name, in part, by giving its services
away free to many users during the pandemic, its number of paying
users also skyrocketed as large businesses and others tried to
connect their workforce and with customers. Zoom ended the year
with about 467,100 customers with more than 10 employees, a nearly
sixfold increase from the year earlier.
"The future is here with the rise of remote and work from
anywhere change. We recognize this new reality, " Chief Executive
Officer Eric Yuan said in an earnings call.
Zoom revenue for the January quarter surged to $882.5 million
from $188.3 million a year earlier. The results beat Wall Street
targets and Zoom's financial projections, driven by the shift to
remote work and distance schooling amid the Covid-19 outbreak.
Zoom's fourth-quarter profit surged to more than $260 million
from $15.3 million in the year-prior period. On a per-share basis,
profit rose to 87 cents, or $1.22 on an adjusted basis.
The company has been adapting its tools to prepare for
businesses having some employees returning to the office and others
continuing to work remotely. Zoom also launched an effort to make
money from its smaller users.
Zoom finance chief Kelly Steckelberg said profitability
continued to be impacted by the company's providing its service to
more than 125,000 K-12 schools that began the new academic year
largely teaching remotely and cloud costs to facilitate all
Costs for the quarter and the full year rose sharply as the
company expanded capacity to meet growing demand, including from
free accounts like school districts, which weighed on margins.
The videoconferencing company, which started trading in the
public markets in 2019, has been one of the biggest corporate
beneficiaries from the shift to remote work and distance schooling,
pitting it against larger rivals like Microsoft Corp.
The company has also faced stricter regulatory and legal
scrutiny over access and storage of user data, for example,
including its use of servers outside of the U.S.
Zoom ended the year with a profit of $671.5 million on $2.65
billion in revenue, compared with $21.8 million in profit and
$622.7 million in revenue a year earlier.
In the current fiscal year, it expects $3.59 to $3.65 a share in
adjusted profit and $3.76 billion to $3.78 billion in revenue,
ahead of analysts' projections, according to FactSet.
Zoom is sitting on more than $4 billion in cash. Ms. Steckelberg
said the company is open to use some of that money to bulk up. "We
are constantly looking for opportunities for other interesting
companies, potentially M&A activity that could add either to
our talent or our technology," she said on the earnings call. But,
she added, CEO Eric Yuan "has a very high bar for both. And so we
just haven't quite found the right match yet."
--Aaron Tilley contributed to this article.
Write to Maria Armental at email@example.com
(END) Dow Jones Newswires
March 01, 2021 18:11 ET (23:11 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.