- Beats on earnings and revenue in Q4
- Stock rallies 6% on higher earnings guidance
- Growth remains stubbornly absent
Video chat app Zoom Video Communications (ZM:NASDAQ) beat Wall Street estimates on both the top and bottom lines in the 31 January 2023 fourth quarter as new enterprise customer wins bolstered performance.
But the stock’s 6%-plus rally in pre-market trading is more about guidance, where the San Jose-based company talked up earnings. Zoom guided for fiscal Q1 adjusted earnings per share of between $0.96 and $0.98, above consensus of $0.85, although revenue expectations in a range of $1.08 billion to $1.085 billion is below consensus of $1.11 billion.
If growth remains stubbornly pedestrian, better to bolster profits, as its recent 15% workforce cut should do. Investors liked the message, the stock set to open later today about $5 higher at $78.65.
That’s still around 8% off recent highs.
WHAT THE COMPANY REPORTED
Zoom reported EPS of $1.22 on revenue of $1.12 billion in the fourth quarter, beating estimates for EPS $0.81 on revenue of $1.1 billion.
Feared enterprise demand softness has not emerged, yet anyway. Enterprise customer numbers rose 12% to about 213,000 year-on-year, taking enterprise revenue to $636.1 million, up 18% year-on-year.
Customers contributing more than $100,000 in trailing 12-month revenue were up 27% to 3,471 from the same quarter last fiscal year.
Looking ahead further ahead, Zoom sees full year adjusted EPS coming in at around the $4.11 to $4.18 mark, way better than consensus of $3.67, implying that pricing remains reasonably firm.
WHERE’S THE GROWTH?
Zoom anticipates revenue in a range of $4.435 billion to $4.455 billion, less than last year’s $4.462 billion. Analysts had been projecting $$4.63 billion.
‘While the macroeconomic situation continues to negatively impact our overall growth, we have maintained a healthy balance sheet and operating cash flow generation of approximately $1.29 billion,’ the company said.
Financially robust Zoom might look, but unless it can reignite growth, investors will lose faith in a company trading on a price to earnings ratio of more than 30.
