In the third quarter of fiscal 2024, Zoom (NASDAQ:ZM) exceeded expectations, reporting adjusted earnings of $1.29 per share, surpassing the Zacks Consensus Estimate by 19.44% and marking a 20.6% increase compared to the previous year. Revenues also outperformed, reaching $1.13 billion, surpassing the consensus mark by 1.66%, driven by significant growth from Enterprise customers.
Details of the Quarter
Revenues from Enterprise customers demonstrated substantial growth, increasing by 7.5% year over year to $660.6 million, representing 58% of the total revenues. Customers contributing more than $100,000 in revenues in the trailing 12 months saw a notable uptick of 13.5% to 3,731, accounting for 29% of revenues—a rise from 27% in the year-ago quarter.
Zoom reported a robust trailing 12-month net dollar expansion rate for Enterprise customers at 105%. The number of Enterprise customers also witnessed a 5% year-over-year increase, totaling more than 219,700.
Zoom’s services, such as Zoom Phone and Zoom Contact Center, experienced significant milestones, with Zoom Phone reaching approximately seven million paid seats. Zoom Contact Center boasted around 700 customers by quarter-end, while Zoom Virtual Agent customers nearly doubled quarter over quarter. The number of customers on Zoom One bundles, inclusive of Zoom Phone, showed an impressive growth of approximately 330% year over year.
Regional Performance
Revenues in the Americas increased by 5.2%, while international market revenues from APAC and EMEA experienced slight declines of 2.2% and 1.4% year over year, respectively.
Non-GAAP Operating Highlights
The fiscal third quarter of 2024 witnessed a 20 basis points expansion in gross margin, reaching 79.7%. Notable reductions were observed in research and development expenses (decreased by 2% YoY to $105.7 million), sales and marketing expenses (decreased by 5.6% to $283.8 million), and general and administrative expenses (decreased by 19.7% to $69.8 million). Operating income increased by 17.4% to $447.1 million year over year, with the operating margin expanding by 480 basis points to 39.3%.
Financial Position
As of October 31, 2023, Zoom reported total cash, cash equivalents, and marketable securities amounting to $6.49 billion, showcasing an increase from $6 billion as of June 31, 2023. Free cash flow also saw growth, reaching $453.2 million, compared to $289.4 million as of July 31, 2023.
Guidance
Zoom projects fourth-quarter fiscal 2024 revenues ranging from $1.125 billion to $1.13 billion, with non-GAAP earnings per share expected in the range of $1.13 to $1.15. For fiscal 2024, the company anticipates revenues between $4.506 billion and $4.511 billion, with non-GAAP earnings per share in the range of $4.93 to $4.95.
Featured Image: Unsplash @ Mourizal Zativa
