Zoom Video Communications Inc (ZM) Posts Modest Revenue Growth and Robust Cash Flow Increase in ...

Mon, Nov 20, 2023 17:05 ET

Zoom Video Communications Inc (ZM) reports a 3.2% year-over-year increase in total revenue for Q3 FY2024.
Enterprise revenue climbs by 7.5%, while GAAP operating margin expands to 14.9%.
Operating cash flow surges by 67% year over year, with free cash flow up by 66.2%.
Zoom anticipates full fiscal year 2024 revenue to be between $4.506 billion and $4.511 billion.

On November 20, 2023, Zoom Video Communications Inc (

ZM, Financial) released its 8-K filing, detailing the financial outcomes for the third quarter of the fiscal year 2024. The company witnessed a modest increase in total revenue, reporting $1,136.7 million, which represents a 3.2% rise from the previous year. When adjusted for foreign currency impact, the revenue growth in constant currency terms was slightly higher at 3.5%.

Financial Performance Overview

Zoom's enterprise segment was a key growth driver, with revenue from this sector increasing by 7.5% year over year to $660.6 million. However, the online revenue segment experienced a 2.4% decline. The GAAP operating margin improved significantly to 14.9%, and the non-GAAP operating margin stood at a robust 39.3%. Net income attributable to common stockholders for the quarter was $141.2 million, or $0.45 per share, a substantial increase from $48.4 million, or $0.16 per share in the same quarter of the previous fiscal year.

GuruFocus has detected 4 Warning Signs with Zoom Video Communications Inc ZM.

Cash Flow and Customer Metrics

Zoom's operating cash flow showed a remarkable year-over-year increase of 67.0%, reaching $493.2 million. Free cash flow followed suit, with a 66.2% increase to $453.2 million. The number of customers contributing more than $100,000 in trailing 12 months revenue grew by 13.5%, and the company had approximately 219,700 enterprise customers, marking a 5.0% increase from the previous year. The trailing 12-month net dollar expansion rate for enterprise customers was 105%.

Balance Sheet Highlights

As of October 31, 2023, Zoom's balance sheet reflected $6.5 billion in cash, cash equivalents, and marketable securities, excluding restricted cash. Total assets amounted to $9.3 billion, while total liabilities were $1.9 billion, resulting in total stockholders' equity of $7.4 billion.

Forward Guidance

For the fourth quarter of fiscal year 2024, Zoom expects total revenue to be between $1.125 billion and $1.130 billion, with non-GAAP income from operations projected to be between $409.0 million and $414.0 million. Non-GAAP diluted EPS is anticipated to be between $1.13 and $1.15. For the full fiscal year 2024, the company forecasts total revenue to be between $4.506 billion and $4.511 billion, with non-GAAP income from operations expected to be between $1.740 billion and $1.745 billion, and non-GAAP diluted EPS between $4.93 and $4.95.

Zoom's CEO, Eric S. Yuan, commented on the results, stating,