ZoomQ1 performance is mixed, profit guidance falls short of expectations

Zhitong
2024.05.20 23:50
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Zoom announced its first-quarter financial results, with revenue increasing by 3.2% year-on-year and profits exceeding expectations. The churn rate of consumers and small business users has slightly increased, attributed to new payment regulations. There are 3,883 enterprise customers that have contributed revenue of over $100,000 in the past 12 months, slightly lower than expected. Revenue from enterprise customers grew by 5.3%. Zoom expects second-quarter revenue to be around $1.15 billion

According to the financial news app Zhitong Finance, on Tuesday morning Beijing time, Zoom (ZM.US) announced its first-quarter performance. The data shows that the company's first-quarter revenue as of April 30 increased by 3.2% year-on-year to $1.14 billion, slightly higher than the market expectation of $1.13 billion; the earnings per share excluding certain items were $1.35, higher than the market expectation of $1.19.

The churn rate for consumers and small business users was 3.2%, compared to 3% in the previous quarter. Revenue from these customers was $475.5 million, with little change compared to the same period last year.

Zoom's CFO Kelly Steckelberg attributed the increase in customer churn rate to new overdue payment regulations, which prompted some customers to cancel orders early.

There were 3,883 enterprise customers contributing revenue of over $100,000 in the past 12 months, slightly below the market expectation of 3,966. Revenue from enterprise customers increased by 5.3% to $665.7 million.

Bloomberg Intelligence analyst John Butler commented after the financial report was released that the results indicate, "the contribution of new products crucial to recovery growth is not enough to offset weakness." He added, "The softness in key performance indicators in the enterprise sector may also reflect the challenges brought by the expansion of the Microsoft team."

Zoom stated that as of the end of the quarter, it had approximately 191,000 enterprise customers, but 26,800 customers with lower monthly revenue were classified as online users rather than enterprise customers. Even after adjusting for this change, the total number of enterprise customers decreased by about 2,600 compared to the previous quarter.

Zoom stated in its announcement, "This shift has no substantial impact on the revenue percentage from enterprise and online customers, net dollar expansion rate, or online average monthly churn rate."

Steckelberg mentioned that 90 customers in Zoom's contact center paid over $100,000 in annual recurring revenue, and 5 phone customers used licenses exceeding 100,000.

Looking ahead, Zoom expects second-quarter revenue of around $1.15 billion by July; earnings per share excluding certain items are expected to be $1.21, slightly below analysts' average expectation of $1.24.

After the financial report was released, Zoom fell by 0.92% in after-hours trading to $63.50. The stock has declined by 11% so far this year

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