Zoom Video Communications (ZM) - Get Report shares moved higher Wednesday after the video conferencing group posted stronger-than-expected first quarter earnings while issuing a robust near-term outlook that eased concerns over a slump in revenues as workers look to return to office life following a year of pandemic-imposed restrictions.
Zoom said non-GAAP for the three months ending in April were pegged at $1.32 per share, a five-fold increase from the same period last year as revenues surged 191% to $956.2 million as its customer base of companies with more than 10 employers rose 87% to just under 500,000.
Looking into the 2022 financial year, which ends in January. Zoom said it sees revenues in the range of $3.975 billion to $3.99 billion, up 5.5% at the higher end of its last forecast, with earnings of between $4.56 and $4.61 per share.
"As parts of the world reopen, a few things are clear. First, many customers I talk to are looking to create hybrid solutions, and they seek to cautiously reopen some offices; and second, each industry, company, and individual varies in their optimal working model," founder and CEO Eric Yuan told investors on a conference call late Tuesday.
"Many companies are redesigning the workplace to enhance the hybrid work experience. So to meet this need, we announced Zoom's features such as Smart Gallery, which puts in-room and remote participants on equal footing, Virtual Receptionist, participant accounting, and environmental sensors," he added. "We have begun to deliver on our platform strategy."
Zoom shares were marked 1% higher in pre-market trading Wednesday to indicate an opening bell price of $331.00 each, a move that would leave the stock with a year-to-date decline of around 1%.
"The focus for investors remains Zoom's ability to backfill a revenue base transitioning to hybrid work environments with Zoom Phone (50% user growth over last 5 months) a key enterprise expansion opportunity and what this means for steady-state growth," said KeyBanc Capital Markets analyst Steve Enders, who carries a 'sector weight' rating on the stock.
"The margin guide assumes no improvement in gross margins from free tiers like K-12 going back to in-person and could see further expansion with more Zoom use shifted back to its DCs from cloud providers," he added.