Investors Hailed Zoom Video Communication’s Strong Quarterly Results, but Market Sentiment Weighs

Zoom Video Communications (ZM) announced on Monday its Q3 2021 financial results, showing that its revenues jumped 35% annually to reach $1.05 billion and top analysts' estimates. Net income was at $340.4 million, surging 71% from a net income of $198.64 million posted in the same quarter of fiscal 2021. It translated into diluted earnings per share of $1.11. The latter figure also surpassed the market expectations.

Over the reported period, Zoom said it had 2,507 customers that contributed more than $100,000 in trailing 12 months revenue, an increase of about 94% from the same quarter last year. The communication platform with more than 10 employees reached approximately 512,100 customers, 18% more than in the year-ago quarter.

Zoom CEO Eric Yuan during his conference call with investors commented that the company expects to close the year between $4.079 to $4.081 billion in total revenue, representing approximately 54% YoY growth, alongside strong profitability and operating cash flow growth. "We are well on our way to becoming an indispensable platform for enterprises, individuals, and developers to connect, collaborate, and build in the flexible hybrid world of work." – he said.

But ZM’s revenue growth is projected at a slower rate than what has been normal for it during the Covid-19 pandemic. For its fourth quarter, it expects to earn between $1.06 and $1.07 a share, excluding one-time items, on revenue in a range of $1.051 billion to $1.053 billion, or just above consensus forecasts for $1.05 billion. Should Zoom reach its estimates, it would result in a 19% revenue gain from the same period a year ago.

Zoom's shares are still in the sideways range, however, they are now more susceptible to market fluctuations.