Shares of videoconferencing company Zoom Video Communications (NASDAQ:ZM) jumped higher on Wednesday, climbing about 8%. The stock's gain adds to a torrid year-to-date run-up. Shares are now up 224% this year, crushing the S&P 500's 3% decline over the same time frame.

Zoom stock's gain on Wednesday came after the company's fiscal first-quarter report, which featured financials that obliterated analysts' estimates. Here's a closer look at the incredible momentum in Zoom's business and what exactly is driving this growth stock higher.

A room of business people people videoconferencing with a woman on a large screen.

Image source: Getty Images.

Accelerated revenue growth

Zoom was expected to report incredible results for its fiscal first quarter as workers and consumers sheltered at home and turned to videoconferencing for interaction and collaboration. But actual results were far ahead of even the most optimistic forecasts.

Revenue for Zoom's fiscal first quarter soared 169% year over year to $328.2 million, trouncing analysts' average forecast for revenue of $202.7 million. Non-GAAP (adjusted) net income during the period was $58.3 million, up from $8.9 million in the year-ago quarter. This translated to fiscal first-quarter non-GAAP earnings per share of $0.20, up from $0.03 in the same quarter last year. This key metric similarly soared passed analysts' average estimate for non-GAAP EPS of $0.09.

Unsurprisingly, management cited work-from-home trends and lockdowns as key drivers for the acceleration in its business. "Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives," said Zoom founder and CEO Eric Yuan in the company's fiscal first-quarter earnings release.

More wild growth ahead

Perhaps even more startling than Zoom's fiscal first-quarter results, however, was the company's extremely bullish outlook. Management said it expected fiscal second-quarter revenue to be between $495 million and $500 million. Analysts, on average, were expecting fiscal second-quarter revenue of $223.3 million. This means Zoom guided for fiscal second-quarter revenue to be more than double what analysts were expecting.

The full-year outlook is just as startling. After previously guiding for full-year fiscal 2021 revenue to be between $905 million and $915 million, management is now calling for fiscal 2021 revenue between $1.775 billion and $1.800 billion.

Zoom's expectation for soaring revenue is anticipated to carry over nicely to its bottom line. The company expects fiscal 2021 non-GAAP EPS to be between $1.21 and $1.29, up from a previous forecast for $0.42 to $0.45.

Putting the company's incredible momentum into perspective, consider how its accelerated growth trajectory has impacted the company's valuation metrics. For instance, Zoom's market cap is now about 35 times management's forecast for fiscal 2021 sales. Based on management's previous sales forecast, shares would be trading at 69 times fiscal 2021 sales right now.

And one final point that helps drive home why investors are so excited about Zoom stock: On $328.2 million in revenue, free cash flow (cash left over after both regular operations and investments in growth opportunities are taken care of) during the quarter was $251.7 million. This means Zoom had a free cash flow yield of 77%.

COVID-19's impact on Zoom's business has been a game changer.

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