Higher Zoom earnings estimates, expectations are raised from artificial intelligence

Higher Zoom earnings estimates, expectations are raised from artificial intelligence

Zoom (ZM) posted a major revenue win and raised guidance for the year in its second-quarter earnings, it reported Monday after the bell.

Zoom’s revenue in the second quarter was $1.14 billion, slightly beating estimates of $1.11 billion. The company also raised its revenue forecast for 2024 — the fiscal year the company is currently in — saying it now expects revenue for the full year to come in from $4.49 billion to $4.5 billion. This is higher than the previous forecast of $4.47B-$4.49B, beating estimates of $4.48B.

The videoconferencing company entered this earnings cycle looking to capitalize on the tailwinds of artificial intelligence. Zoom has been looking for a lift since the pandemic-fueled boom turned into a crash.

Zoom stock rose more than 5% after hours. The company’s shares have entered this earnings cycle primarily year-to-date.

Earnings summary

That’s what Zoom reported for the second quarter versus estimates, according to Bloomberg data.

he won: $1.14 billion actual vs. $1.11 billion estimated

Adjusted EPS: $1.34 Actual vs $1.05 Estimated

Free cash flow: $289.4 million versus the estimated $258.6 million

Number of corporate clients: 218,000 actual vs. 219,350 estimated

Revenue forecast for the third quarter: $1.12 billion actual vs. $1.12 billion estimated

The Zoom logo is displayed on the smartphone with the Zoom screen in the background.

The Zoom logo is displayed on the smartphone with the Zoom screen in the background. (Jonathan Ra/NurPhoto via Getty Images)

What else caught our eye: artificial intelligence

Zoom was expecting AI to consolidate its gains this year, especially when it comes to margins.

“For the full year, we expect non-GAAP gross margin to be approximately 79.7% as we make additional investments in new AI technologies,” CEO Eric Yuan said in his prepared remarks.

This summer, the company also brought in a new CTO, XD Huang, who came to the organization with outstanding expertise in artificial intelligence. He was previously in the same role in Azure AI at Microsoft (MSFT).

“XD joins us at the perfect moment in our AI journey,” Yuan wrote in the earnings call release. “As we develop and deploy AI solutions, we strongly believe that technology should foster trust. We are fortunate to have countless customers rely on us for their communications needs. We don’t take it for granted. Earlier this month, we took the extra step in Explain that Zoom does no Use Customer Content to train our own AI models or third-party AI models. “

What analysts said about the advance earnings:

“ZM shares have underperformed their software peers year-to-date, and we reserve our cautious view heading into FQ2 results. Although the Internet is showing signs of stabilizing, we are concerned about growing weakness in the enterprise sector amid the peak of the multi-year renewal cycle, given the winds of competition. / Adverse consolidation and GTM changes…. We maintain a sell rating because we believe margins are peaking and we don’t see an easy path to regain growth.” Tyler Radke from Citi

This is breaking news. . Please check back for updates

Ali Garfinkel Senior Technical Correspondent at Yahoo Finance. Follow her on Twitter at @tweet and on linkedin.

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