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Zoom's Q4 Earnings Crush Estimates

By Daniel Sparks - Updated Mar 4, 2020 at 6:38PM

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But revenue growth notably continues to decelerate.

Zoom Video Communications (ZM 4.22%) has been a hot topic recently. In February, shares surged as investors bet that the company would benefit from reduced travel amid global coronavirus concerns.

Now, with the release of Zoom's fiscal fourth-quarter results after market close on Wednesday, investors are getting an updated view into the company's performance. The videoconferencing company continues to grow at a torrid rate, with revenue and non-GAAP earnings per share for fiscal Q4 both easily beating analysts' estimates. Further, Zoom's guidance for the current quarter also came in ahead of analysts' consensus forecast.

Here's a closer look at the tech company's fiscal fourth-quarter results.

A conference room of business people video conferencing with a woman on a TV

Image source: Getty Images.

Strong growth

Revenue in Zoom's fourth quarter of fiscal 2020 jumped 78% year over year to $188 million. Analysts, on average, were expecting revenue of $177 million.  

This notably extends a trend of decelerating revenue growth for Zoom. In Zoom's third quarter of fiscal 2020, revenue rose 85% year over year to $166.6 million. Revenue increased 96% in the second quarter of fiscal 2020. 

Zoom's fiscal fourth-quarter non-GAAP earnings per share came in at $0.15, crushing analysts' average forecast for non-GAAP earnings per share of $0.07.

Zoom founder and CEO Eric Yuan was pleased with the quarter's overall financial results, pointing to the company's "unique combination of high total revenue growth of 78% at a scale of $188 million, GAAP income from operations of $11 million, non-GAAP income from operations of $38 million, and operating cash flow of $37 million."

Growth during the period was fueled by strong customer growth. Customers with more than 10 employees increased 61% year over year to 81,900 and those contributing more than $100,000 in trailing-12-month revenue jumped 86% year over year. Management also noted that its trailing-12-month net dollar expansion rate, a measure of increased spend with existing customers, grew 130% year over year for the seventh consecutive quarter.

Looking ahead

Zoom guided for fiscal first-quarter revenue to be between $199 million and $201 million. The midpoint of this guidance range implies 64% year-over-year growth. Management, therefore, seems to expect its trend of decelerating revenue growth to continue. Zoom guided for fiscal first-quarter non-GAAP earnings per of $0.10. Analysts were expecting Zoom to guide for fiscal first-quarter revenue of $185.7 million and non-GAAP earnings per share of $0.06.

Zoom guided for full-year fiscal 2021 revenue to be between $905 million and $915 million and non-GAAP earnings per share to be between $0.42 and $0.45. Analysts were modeling for revenue and non-GAAP earnings per share of $868 million and $0.30, respectively.

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