Solid earnings drives Zoom Video Communications Inc (NASDAQ: ZM) stock to all time high

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Zoom Video Communications Inc (NASDAQ: ZM) stock rose over 4.5% on 3rd June, 2020 (as of 10:11 am GMT-4 ; Source: Google finance) after the company posted better than expected results for the first quarter of FY 21 and raised its full-year revenue on the back of a surge in usage of its video conferencing platform as people turn to virtual meetings to stay connected and work remotely amid broader stay-at-home measures. The company continues to see expansion in the up-market as the company ended Q1 at 769 customers with greater than $100,000 in trailing 12 months revenue, which is up 90% year-over-year. This is an increase of 128 customers compared to Q4, a record number of adds in a quarter. Further, both domestic and international markets had posted strong growth during the first quarter. Americas rose at a rate of 150% year-over-year and the combined APAC and EMEA revenue grew even faster at 246% year-over-year and represented approximately 25% of revenue. ZM has ended Q1 with about $1.1 billion in cash, cash equivalents and marketable securities, excluding restricted cash. In Q1, the company had generated operating cash flow of $259 million, up from $22 million year-over-year. In Q1, the company had generated free cash flow of $252 million, up from $15 million year-over-year.

ZM in the first quarter of FY 21 has reported the adjusted earnings per share of 20 cents, beating the analysts’ estimates for the adjusted earnings per share of 10 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 169 percent to $328.17 billion in the first quarter of FY 21, beating the analysts’ estimates for revenue by 61.64%. For the first quarter, the growth in revenue was mainly driven by subscriptions provided to new customers, which accounted for about 71% of the increase, while subscriptions provided to existing customers accounted for about 29% of the increase. The company posted Non-GAAP gross margin for the first quarter of 69.4%, compared to 80.9% in Q1 last year and 84.2% last quarter. The company also delivered Non-GAAP operating income was $55 million, leading to a 16.6% non-GAAP operating margin for the first quarter. This is compared to Q1 last year’s result of $8 million and 6.7% margin.

The company raised its full-year outlook to a range of $1.78 billion to $1.80 billion, up from $905.0 million to $915.0 million expected previously. The analysts on an average expected revenue of $935.2 million, according to IBES data from Refinitiv.

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