The video conferencing company was a prime beneficiary of the Covid-19 pandemic as many workers and students stayed at home.
2 min
Zoom Video Communications posted better-than-expected results for its fiscal fourth quarter, ended Jan. 31, and stronger-than-expected guidance, driving the stock sharply higher in after-hours trading.
The video conferencing company, a prime beneficiary of the Covid-19 pandemic as many workers and students stayed at home for the last year, reported revenue for the quarter of US$882.5 million, up 369% from a year earlier, with adjusted profits of US$365.4 million, or $1.22 a share. Under generally accepted accounting principles or GAAP, the company earned US$256.1 million, or 87 cents a share.
Zoom shares, which had rallied 9.7% to $409.66 in Monday’s regular session, gained another 9% in late trading to $446.63.
For the full year, Zoom had revenue of $2.65 billion, up 326%, with non-GAAP profits of $995.7 million, or $3.34 a share. The company finished the year with $4.2 billion in cash and short-term investments.
Zoom had projected revenue for the quarter of $806 million to $811 million, with non-GAAP profits of 77 to 79 cents a share. Management has predicted full-year revenue of between $2.575 billion and $2.58 billion, with non-GAAP profits of $2.85 to $2.87 a share.
The consensus call on Wall Street was for January quarter revenue of $811.8 million, with non-GAAP profits of 79 cents a share.
The company said it had 467,000 customers with more than 10 employees, up 33,400 from a year ago. Enterprise customers, those with annual revenue above $100,000, rose 355 to 1,644. Zoom Phone customers increased 269% year-over-year to 10,700.
The company’s financial guidance was higher than Wall Street expected, but still underlines the fact that growth will slow considerably from here as the world begins to get past the pandemic.
For the April quarter, Zoom is projecting revenue of $900 million to $905 million, with non-GAAP profits of 95 to 97 cents a share. The Street had been projecting revenue of $804.8 billion and profits of 72 cents a share.
For the full year ending in January 2022, the company expects revenue of $3.76 billion to $3.78 billion, up 42% from the previous year at the midpoint of the range, with non-GAAP profits of $3.59 to $3.65 a share.
The Street previously had been projecting fiscal year January 2022 revenue of $3.52 billion with non-GAAP profits of $2.96 a share.
“The fourth quarter marked a strong finish to an unprecedented year for Zoom,” CEO and founder Eric Yuan said in a statement. “As we enter [fiscal year] 2022, we believe we are well-positioned for strong growth with our innovative video communications platform, on which our customers can build, run, and grow their businesses; our globally recognized brand; and a team ever focused on delivering happiness to our customers.”
Piper Sandler analyst James Fish noted in a brief research note published Monday after earnings that results came in above expectation on all metrics and that the full-year guidance suggested “the market dynamics remain strong” in cloud-based communications.
Copyright 2020, Dow Jones & Company, Inc. All Rights Reserved Worldwide. LEARN MORE
The Australian leather house has opened an immersive four-day pop-up in Manhattan, unveiling its Bloom Collection and redefining what a product launch can look like.
Following the successful launch of its Palais Collection, MAISON de SABRÉ has unveiled a new modular handbag system offering more than 720 styling combinations.
Investors are bracing for a bumpier fall stock market due to shifting odds of a Federal Reserve interest-rate increase and other macro challenges.
3 min
The stock market had a decent summer. Investors are bracing for a bumpier fall.
In the past couple of months, equity investors cheered soaring profits at big companies, shrugged off jitters in the bond market and nudged megacap tech shares back near records.
Now, as the post-Labor Day stretch begins, a number of new challenges lie ahead: ever-shifting odds of an interest-rate increase from the Federal Reserve. Sky-high expectations after a stunning earnings season. The persistent threat of higher consumer prices as fighting in the Middle East drags on.
“You’re moving from this earnings-driven market to this macro-driven market with the Fed, inflation and interest rates in focus,” said Keith Lerner, chief investment adviser for Truist Advisory Services. “It tends to be a choppier period.”
Historically, every major U.S. stock index experiences its worst average return in September. The Dow Jones Industrial Average has slid an average 1.1% in the ninth month of the year, in data that dates back to the 19th century. The S&P 500 has seen the same average decline—and for every September dating back to 1928, the benchmark ends the month lower more than half of the time.
Analysts caution against reading too much into those seasonal patterns. But in recent weeks, new reasons for investor caution have emerged. One of the largest: the looming threat of an interest-rate increase from the Fed, which announces its next policy decision on Sept. 16.
Chairman Kevin Warsh’s decision to ditch forward guidance and take more of his cues from markets has muddied the waters for investors when it comes to monetary policy. That has left traders scouring Fed governor speeches and economic-data reports for clues on the central bank’s next move.
“There’s going to be a lot of eyes on those numbers,” said John Luke Tyner, head of fixed income and portfolio manager at Aptus Capital Advisors.
The past couple of weeks offered just one example of how frequently those expectations can change. After Warsh struck a hawkish tone during remarks on Aug. 28, the odds of a hike at the Fed’s next meeting jumped from 35% before the speech to 58%, according to CME FedWatch data.
On Thursday, Fed governor Christopher Waller made a case for leaving rates where they are. Interest-rate futures showed coin-flip odds between a hike and a hold. Then Friday’s robust jobs report amped up rate-hike bets once more, back to a roughly 60% chance of higher rates after the meeting.
“Rates have really been driving the car for equities the last few weeks,” said Ross Mayfield, an investment strategist at Baird.
That uncertainty comes as an unruly bond market could put pressure on stocks. Treasury yields have marched higher for much of the summer, driven by concerns about rising oil prices, growing U.S. budget deficits and a deluge of tech-company bonds now competing for investors’ cash. Last week, the rout went global, pushing yields to multiyear highs in Japan, Germany and the U.K.
Higher bond yields can drag on stock prices and lift borrowing costs for companies and consumers across the economy.
Rising prices remain the top concern for bond traders, and continued fighting between the U.S. and Iran has done little to ease those worries. The national average price of diesel climbed to a record of $5.850 on Friday, according to AAA. That is up from $3.712 a year ago.
Investors will get more insight on the path of prices this week, with the much-awaited consumer-price index report due Friday and a reading on producer prices Thursday.
With another blockbuster earnings season in the books, some analysts have also warned that any boost from the third-quarter reports due in the coming months could be minimal. Back-to-back quarters of standout profits have raised expectations and made it especially difficult to impress traders. Custom-chip company Broadcom, for example, said Wednesday that it more than tripled its earnings and nearly doubled its revenue. Shares slipped 2.7% the next session.
Many analysts note there are plenty of reasons not to panic. The economy is in impressive shape, thanks to a healthy labor market and the rippling effects of the artificial-intelligence investment boom. Profits are booming at America’s biggest companies. The Cboe Volatility Index has dropped to its lowest levels of 2026. Credit spreads are tight, a sign bond investors aren’t concerned about economic conditions that could hurt companies.
But the mood has shifted from the euphoria that felt tangible when the Nasdaq was notching back-to-back records early this summer. The question, Mayfield said, is whether the fundamentals that have bolstered the bull market so far can stretch the rally into 2027.
“There are more anxieties or uncertainties about the backdrop,” he said. “It does feel like a transitional moment.”
