Zoom (ZM) clocked a key revenue beat and raised guidance for the year in its second quarter earnings, reported Monday after the bell.
Zoom’s revenue for Q2 was $1.14 billion, slightly beating estimates for $1.11 billion. The company also raised its revenue forecast for 2024 – the fiscal year that the company is currently in – saying it now expects revenue for the full year to come in at $4.49 billion-$4.5 billion. That’s up from the previous forecast of $4.47 billion-4.49 billion, beating estimates for $4.48 billion.
The videoconferencing company came into this earnings cycle looking to capitalize on artificial intelligence tailwinds. Zoom has been looking for a lift since its pandemic-fueled boom cycled into a bust.
Zoom stock climbed over 5% after hours. Shares of the company came into this earnings cycle essentially flat year to date.
The earnings rundown
Here is what Zoom reported for Q2 versus estimates, according to Bloomberg data.
Revenue: $1.14 billion actual versus $1.11 billion estimated
Adjusted EPS: $1.34 actual versus $1.05 estimated
Free Cash Flow: $289.4 million versus $258.6 million estimated
Number of Enterprise Customers: 218,000 actual versus 219,350 estimated
Q3 Revenue Forecast: $1.12 billion actual versus $1.12 billion estimated
What else caught our attention: AI
Zoom was expecting AI to boost its wins this year, especially when it comes to margins.
“For the full year, we expect non-GAAP gross margin to be approximately 79.7%, as we make additional investments in new AI technologies,” CEO Eric Yuan said in his prepared remarks.
The company this summer also brought in a new chief technology officer, XD Huang, who came into the organization with distinct AI experience. He was previously in the same role for Azure AI at Microsoft (MSFT).
“XD joins us at an optimal moment in our AI journey,” Yuan wrote in the earnings call statement. “And, as we develop and deploy AI solutions, we strongly believe that technology should advance trust. We are privileged to have countless customers rely on us for their communications needs. We don’t take that for granted. Earlier this month, we took the additional step in stating that Zoom does not use customer content to train our AI models or third-party AI models.”
What analysts were saying pre-earnings:
“ZM shares have underperformed software peers YTD and we retain our cautious view heading into FQ2 results. Although Online is showing signs of stabilization, we worry about incremental weakness in the Enterprise segment amidst a peak multi-year renewal cycle, given competition/ consolidation headwinds and GTM changes. … We stay sell rated as we believe margins are peaking and we don’t see an easy path for growth recovery.” -Citi’s Tyler Radke
This is breaking news. Please check back for updates.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
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