Zoom Video Communications (NASDAQ:ZM) has been one of the biggest stock gainers of 2020 -- it was up more than 200% year to date going into its fiscal 2021 first-quarter earnings report late Tuesday, with a serious amount of future growth built into its stock price. Yet in spite of the high bar set by those expectations, the company's results sailed past even the most enthusiastic projections.
The company reported revenue of $328.2 million, up 169% year over year, and accelerating from the 78% growth the company generated in the previous quarter. This resulted in non-GAAP earnings per share (EPS) of $0.20, up 566%. Both top and bottom line easily eclipsed analysts' consensus estimates, which called for revenue of $202 million and EPS of $0.09.
Customer growth was impressive by every measure
It isn't just the financial metrics that illustrated the accelerating adoption Zoom experienced during the quarter -- the customer metrics were equally impressive. The company cited both the acquisition of new customers and expansion across its existing customer base as helping drive its robust revenue growth.
Zoom reported 265,400 customers with greater than 10 employees, up 354% compared to the prior-year quarter. Even more importantly, the company added a net of 128 enterprise customers -- those that individually contributed at least $100,000 in trailing-12-month revenue -- bringing the total to 769, up 90% year over year.
Existing customers did their part to contribute to the growth story. For the eighth successive quarter, the net dollar expansion rate -- which measures increased business from current clientele -- grew 90% compared to the year-ago quarter.
More customers equals record use metrics
This combination of growing business from both new and continuing customers resulted in mind-boggling use metrics. In April, the service peaked at more than 300 million daily meeting participants, resulting in an annualized meeting minutes run rate of more than 2 trillion. To put this in perspective, the platform hosted just 10 million daily meeting participants in December.
Zoom also expanded its international presence impressively. While revenue in the Americas increased 150%, year over year, in the Europe/Middle East/Africa (EMEA) and Asia Pacific (APAC) regions, it grew even more quickly, by 246%.
The company's remaining performance obligation (RPO) -- which consists of future revenue that is under contract but has not yet been recognized -- swelled 183% to $1.07 billion. Of that total, Zoom expects to recognize $722 million in RPO in the coming 12 months.
"We were humbled by the accelerated adoption of the Zoom platform around the globe in Q1," said founder and CEO Eric Yuan. "The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives."
An eye-catching forecast
Investors hoping for an increase in the technology company's guidance were not disappointed, and may even have done a double-take when they saw the new outlook.
Zoom updated its full-year forecast and now expects revenue in a range of $1.775 billion and $1.8 billion, which would represent year-over-year growth of 187% at the midpoint. To put this into context, it's nearly double the full-year forecast of $910 million management issued just last quarter. The company is also expecting non-GAAP EPS of between $1.21 and $1.29, more than triple the $0.35 it generated last year.
Over the past several months, Zoom has gone from a speculative play to a verb, and from a business luxury to a necessity. The results this quarter have gone a long way toward proving that even with a multitude of free users on its rolls, Zoom can continue its speedy paid-customer growth.