Zoom Video Communications Inc (NASDAQ: ZM) stock fell over 2.6% on 6th September, 2019 (As of 9:54 am GMT-4 ; Source: Google finance) as the company posted better than expected results for the second quarter of FY 20 and raised the outlook for the year. Zoom went public in April at $36 a share, but has traded for no less than twice that price since May, giving it the highest enterprise value-to-sales ratio of any company worth more than $500 million. The combination of the land and expand strategy, along with the continued up-market focus, resulted in Q2 ending with 466 customers with more than $100,000 in revenue over the last 12 months. This is up 104% year-over-year. This also led to a net dollar expansion rate that was over 130% for the fifth consecutive quarter as customers are deploying more Zoom products and adding more licenses within their organizations. ZM has ended Q2 with approximately $755 million in cash, cash equivalents and marketable securities. Deferred revenue at the end of the quarter was $181 million, up 102% year-over-year. Operating cash flow was $31 million in Q2, up from $14 million in the same period a year ago. Free cash flow was $17 million in Q2, up from $8 million in the same period a year ago.
ZM in the second quarter of FY 20 has reported the adjusted earnings per share of 8 cents, beating the analysts’ estimates for the adjusted earnings per share of 1 cents. The company had reported the adjusted revenue growth of 96 percent to $145.8 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $130.3 million, according to FactSet. Non-GAAP gross margin in the second quarter was 82.2%, compared to 82.8% in Q2 of last year and 80.9% last quarter. Non-GAAP operating income was $21 million, translating to a 14.2% non-GAAP operating margin for the second quarter.
Further, in Q2, the APAC and EMEA revenue combined grew 115% year-over-year and represented approximately 20% of revenue. Revenue from the Americas was up 91% year-over-year and represented approximately 80% of revenue. This high revenue growth and strategic customer wins are evidence that the investments to expand the global footprint are succeeding.
The company has raised its annual forecast to adjusted earnings of 18 to 19 cents a share on sales of $587 million to $590 million, up from earlier guidance of 2 to 3 cents a share on annual sales of $535 million to $540 million.