Zoom Surpasses Expectations in Q3 Earnings as Enterprise Revenue Rises

Zoom Communications (ZM) posted stronger-than-anticipated third-quarter results after the market closed on Monday, driven by growth in its enterprise revenue segment. The company also announced a corporate name change from Zoom Video Communications to Zoom Communications, reflecting its broader offerings beyond video conferencing.

Revenue for the quarter rose by 4%, reaching $1.18 billion, surpassing analyst estimates compiled by Visible Alpha. Net income climbed to $207.1 million, or 66 cents per share, up from $141.21 million, or 45 cents per share, in the same period last year. Both figures exceeded market expectations. Enterprise revenue increased by 6% to $698.9 million, while online revenue remained relatively steady at $478.7 million.

Upgraded Full-Year Outlook

Zoom revised its full-year guidance upward, boosting its adjusted earnings per share forecast to a range of $5.41 to $5.43, compared to its previous estimate of $5.29 to $5.32. The company also raised its revenue projection to between $4.66 billion and $4.66 billion, slightly higher than the prior forecast of $4.63 billion to $4.64 billion. Both updates were above analysts' projections.

Growth Fueled by New Customers and AI Innovations

The earnings growth reflects Zoom's efforts to expand its customer base and enhance its product offerings with advanced artificial intelligence (AI) features. By the end of the third quarter, the company reported having 3,995 customers contributing over $100,000 in trailing 12-month revenue, a 7.1% increase year-over-year.

CEO Eric Yuan highlighted "major milestones" from Zoomtopia, the company's annual event held last month. Among the notable announcements were AI Companion 2.0 and new paid AI add-ons, which aim to enhance user experiences and drive premium product adoption.

Market Reaction

Despite the strong financial performance, Zoom's stock showed mixed movement during after-hours trading on Monday. However, as of the market close, shares had gained nearly 24% since the start of 2024.