Zoom Settles Class-Action Privacy Lawsuit for $85 Million

Zoom Reports Record Revenue of $777.2 Million in Q3 FY21

Representing a 367% increase year-over-year

Earlier this week, Zoom Video Communications reported record revenue of $777.2 million for its third quarter of fiscal year 2021 which ended October 31, 2020. Quarterly revenue represented a 367% increase over the same period last year. Zoom also reported that the number of customers contributing more than $100,000 in revenue for the trailing 12 months increased 136% year-over-year to 1,289. Zoom now has 433,700 customers with more than 10 employees, an increase of 485% year-over-year.

CEO comments

“We remain focused on the communication needs of our customers and communities as they navigate the current environment and adapt to a new world of work from anywhere using Zoom. We aspire to provide the most innovative, secure, reliable, and high-quality communications platform to help people connect, collaborate, build and learn on Zoom,” said Eric S. Yuan, founder and CEO of Zoom Video Communications.

“Strong demand and execution led to revenue growth of 367% year-over-year with solid growth in non-GAAP operating income and cash flow in our third fiscal quarter. We expect to strengthen our market position as we finish the fiscal year with an increased total revenue outlook of approximately $2.575 billion to $2.580 billion for fiscal year 2021, or approximately 314% increase year-over-year,” Yuan added.

Quarterly highlights

Other highlights for the quarter include:

  • Zoom reported GAAP net income attributable to stockholders was $198.4 million, or $0.66 per share, compared to a GAAP net income attributable to stockholders of $2.2 million, or $0.01 per share, for the third quarter of fiscal year 2020.
  • GAAP operating margin was 24.7%, and non-GAAP operating margin was 37.4%.
  • Total cash, cash equivalents and marketable securities, not including restricted cash, was $1.9 billion, as of October 31, 2020.
  • Fitness platform Peloton joined the Zoom family as a customer, and current customer Rakuten has increased their commitment. Rakuten has 42,000 meeting licenses and more than 1,000 Zoom Rooms around the world.
  • Customers with 10 or fewer employees make up about 38% of revenue, up 36% from the second quarter.
  • Overall, Zoom Video Communications added approximately 63,500 new customers during the third quarter.
  • The company reported an annualized run rate of 3.5 trillion meeting minutes, a 75% increase quarter-over-quarter, from paid and free participants.
  • Zoom launched the OnZoom platform for paid events and fundraisers to help support small businesses, nonprofits and entrepreneurs share their services online.

Q4 and Full Year Guidance for FY2021

Zoom Video Communications shared the following outlook for the fourth quarter of fiscal year 2021 and the full fiscal year 2021. The guidance assumes that remote work solutions will remain high through the end of the quarter, and that churn will be higher than normal because the company now has more subscribers with monthly subscriptions than in the past.

Fourth quarter fiscal year 2021

  • Total revenue will range between $806.0 million and $811.0 million.
  • Non-GAAP income from operations will be between $243.0 million and $248.0 million.
  • Non-GAAP diluted earnings per share will range between $0.77 and $0.79.

Full fiscal year 2021

  • Total revenue will range between $2.575 billion and $2.580 billion.
  • Non-GAAP income from operations will be between $865.0 million and $870.0 million.
  • Non-GAAP diluted earnings per share will range between $2.89 and $2.91.

Zoom Video Communications’ stock drops

Despite the stellar results, Zoom stock dropped from $478.36 on Monday, November 30 (the day the earnings were released) to $412.61 as of 2:38 p.m. EST yesterday. Motley Fool said this could be due to the decrease in gross margin or the general feeling that coronavirus vaccines will help return our work lives to normal.

Stock value for Zoom Video Communications, Dec. 2, 2020. Source: Google

Insider Take

As the world continues in lockdown, Zoom Video Communications remains popular as a top video solution to connect work groups, friends and family and to assist educators in running online education programs from students around the world. Zoom has leveraged this popularity by offering Hardware as a Service and OnZoom as new products and services. The company has also been generous with its platform, offering it for free to many educational institutions and by dropping the time limit for free meetings on Thanksgiving to help Americans connect with their loved ones. We don’t know the future of COVID, but I think it is safe to assume that Zoom’s fourth quarter fiscal year 2021 results will be similar to the third quarter. Even as vaccines roll out, it will be some time before work returns to “normal,” if it ever does.

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