Zoom Video Communications has reported a remarkable quarterly performance, with its revenue surpassing analysts” expectations. On November 24, the company announced that its fiscal third-quarter sales increased by 4.4%, reaching an impressive $1.23 billion. This report highlighted a profit of $1.52 per share, significantly higher than the anticipated $1.44 per share.
As the tech landscape evolves, Zoom is making notable strides by expanding its service offerings, which now include business phone systems and software tailored for contact centers. Renowned for its widely used videoconferencing platform, the company also unveiled an enhanced version of its artificial intelligence assistant at its annual conference in September. This upgrade allows users to create custom AI tools for a subscription fee of $12 per month.
Eric Yuan, the founder and CEO of Zoom, expressed optimism regarding the growth of AI Companion usage, particularly following the recent launch of AI Companion 3.0. Yuan acknowledged the rapid adoption of the Custom AI Companion and the AI-first Customer Experience suite, indicating strong market interest.
The company”s shares experienced a notable increase of approximately 4% in after-hours trading, after closing at $78.60 in New York on Monday. Despite this positive trend, Zoom”s stock has faced challenges throughout the year, dropping by 3.7%, amidst broader market concerns related to application software.
Revenue generated from enterprise clients rose by 6.1%, amounting to $741.4 million, outperforming the analysts” prior estimate of $731.6 million. As of the latest count, Zoom reported having 4,363 clients contributing over $100,000 each in the past year. The average monthly churn rate for individual and small business users fell to 2.7%, down from 2.9% in the previous quarter, reflecting the impact of eased pandemic restrictions on user retention.
During an analyst call following the revenue announcement, CFO Michelle Chang noted that the company is actively pursuing strategies to boost revenue while maintaining strong profitability and minimizing shareholder dilution. Additionally, Zoom has increased its total share buyback limit by $1 billion, underscoring its commitment to returning value to shareholders.
Looking ahead, Rishi Jaluria, an analyst at RBC Capital Markets, recognized Zoom”s enterprise business as a significant asset. Jaluria highlighted the importance of monitoring the advancements of the new AI companion tool, the stabilization of churn among casual users, and the anticipated long-term profit margins for the company.
