Zoom Video Communications (NASDAQ:ZM) Stock Sees Minor Dip Despite Strong Q1 Results
Zoom Video Communications, known for its popular video conferencing platform, reported robust financial performance for the first quarter, surpassing analyst expectations for both earnings and revenue. The company announced an adjusted EPS of $1.35, exceeding the consensus of $1.19, while revenue came in higher than expected at $1.14 billion compared to the predicted $1.13 billion.
Despite the positive earnings report, Zoom’s stock experienced a slight decline of 0.5% following the release of guidance for the second quarter and full fiscal year 2025, which painted a more cautious picture. The company anticipates Q2 adjusted EPS to fall between $1.20 and $1.21, slightly below the analyst consensus of $1.23. Additionally, the projected revenue range for Q2 is $1.145 to $1.15 billion, which is at the lower end of the estimated $1.15 billion.
Looking ahead to the full fiscal year 2025, Zoom forecasts an adjusted EPS of $4.99 to $5.02, surpassing the consensus of $4.91. The revenue guidance for FY2025 is set at $4.61 to $4.62 billion, aligning closely with the analyst estimate of $4.61 billion.
In terms of performance, Zoom’s first-quarter revenue saw a 3.2% increase year over year, with a substantial 5.3% growth in Enterprise revenue reaching $665.7 million. The company reported a GAAP operating margin of 17.8% and an adjusted operating margin of 40.0%. Notably, Zoom’s operating cash flow surged by 40.6% year over year to $588.2 million, highlighting its strong financial position.
CEO Eric S. Yuan credited the company’s success in the first quarter to the integration of AI technology across Zoom’s platform and strategic investments. Yuan emphasized that these innovations, coupled with focused execution and investment, enabled Zoom to outperform its guidance and achieve significant growth in operating cash flow.
Moreover, Zoom reported customer growth, with 3,883 customers contributing more than $100,000 in trailing 12 months revenue, reflecting an 8.5% increase from the same period last fiscal year.
While Zoom’s first-quarter results exceeded expectations, the cautious outlook provided in the guidance for the coming quarters led to a minor dip in the company’s stock. Despite this, Zoom remains optimistic about its long-term prospects as it continues to innovate and invest strategically in its platform.
