Zoom eyes bigger enterprise customers despite weak Q1 forecast

The company claims the move will help it to achieve the same growth seen at the beginning of the pandemic

Trade

Image: Zoom

1 March 2022

Zoom reported impressive earnings for the fourth quarter of 2021 on Monday, but shares of the company fell precipitously following its weak outlook for Q1.

In contrast to the impressive growth the video conferencing firm recorded at the beginning of the Covid-19 pandemic, Zoom’s latest earnings pale even as it pursues larger enterprise clients.

Zoom reported a non-GAAP net income per share of $1.29 for Q4 2021. Revenue for the full fiscal year totaled $4.1 billion, up 55% year over year, while revenue for the fourth quarter amounted to $1.1 billion, up 21%.

Zoom’s board of directors authorised a programme to buy back up to $1 billion of Zoom’s outstanding Class A common stock.

Acquisition of new customers and expanding sales across existing customers accounted for the bulk of Zoom’s Q4 revenue. By the end of the quarter, the firm had 2,725 customers contributing more than $100,000 in trailing 12-month revenue, up approximately 66% from the previous quarter.

However, enterprise clients take centre stage. Zoom served approximately 191,000 enterprise customers at the end of Q4, a 35% year-on-year increase.

For Q1 2023, Zoom expects total revenue to range from $1.07 billion to $1.075 billion. For the full fiscal year 2023, total revenue is expected to range between $4.53 billion and $4.55 billion, and non-GAAP income from operations is expected to vary between $1.43 billion and $1.45 billion.

“Looking forward, we are addressing a large opportunity as we expect customers will continue to transform how they work and engage with their customers,” said Zoom founder and CEO, Eric S. Yuan. “It is apparent that businesses want a full communications platform that is integrated, secure, and easy to use.

“We are proud to lead the charge of the digital transformation for communications. To sustain and enhance our leadership position, in fiscal year 2023 we plan to build out our platform to further enrich the customer experience with new cloud-based technologies and expand our go-to-market motions, which we believe will enable us to drive future growth.”

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