(Bloomberg) — Zoom Video Communications Inc. gave a sales forecast for the current quarter that topped analysts’ estimates, signaling the company’s ability to retain and add large customers even as intense demand created by the pandemic eases.
Revenue in the period ending in July will be as much as $990 million, the San Jose, California-based company said Tuesday in a statement. Analysts, on average, projected $942 million, according to data compiled by Bloomberg. Profit, excluding certain items, will be $1.14 to $1.15 a share. Analysts estimated 94 cents.
Zoom was thrust into the public consciousness as the coronavirus pandemic hit in early 2020, becoming almost instantly ubiquitous as people forced home by lockdowns used the service to connect remotely to work, school, friends and family. Investors have raised concerns this year about whether that growth could continue as vaccinations increased and shutdowns ended. Chief Executive Officer Eric Yuan has pushed to diversify, adding premium products such as a cloud-based phone system to appeal to more large corporations as well as small and mid-sized businesses.
“We are energized to help lead the evolution to hybrid work that allows greater flexibility, productivity, and happiness to both in-person and virtual connections,” Yuan said in the statement.
Shares climbed about 1.5% extended trading after initially slipping about 3%. While the stock jumped almost fivefold in 2020, it has declined 2.8% so far this year.
For the first quarter, which ended April 30, Zoom’s sales almost tripled to $956 million, compared with analysts’ average estimate of $910 million. Profit, excluding some items, was $1.32 a share. Analysts projected 99 cents.
The company’s app offers video gatherings free for 40 minutes and as many as 100 participants before users are charged. Analysts have focused on the churn, or the number of customers who drop monthly or annual subscriptions, particularly among corporate users.
Zoom said it had 497,000 customers with more than 10 employees, a jump of about 87% from a year earlier and topping analysts’ average estimate of 486,415. The company also said 1,999 clients contributed at least $100,000 in trailing 12-month revenue. Analysts projected 1,787 such large customers.
“We believe accelerating growth in clients generating over $100,000 in sales should remain a key focus,” Bloomberg Intelligence analyst Amine Bensaid said in a report before the results. “That’s because a customer cohort with 10 or fewer employees still encompasses about 37% of total sales vs. 20% pre-pandemic, and higher enterprise client adoption may help in offsetting a potential spike in churn for that cohort.”
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