Zoom reports encouraging growth in third quarter financial results

Zoom Video Communications has shared its financial results for the third fiscal quarter, which ended on 31 October 2023 and showed encouraging growth despite a challenging global market.

Zoom is an all-in-one intelligent collaboration platform that makes connecting more accessible, immersive, and dynamic for businesses and individuals. Zoom technology puts people at the centre, enabling meaningful connections, facilitating modern collaboration, and driving human innovation through solutions like team chat, phone, meetings, omnichannel cloud contact centre, smart recordings, whiteboard, and more in one offering. 

In Q3, Zoom reported a total revenue of USD $1,136.7 million, representing a year-over-year increase of 3.2% (3.5% in constant currency terms). A significant portion of this came from Enterprise revenue, which totalled USD $660.6 million, up 7.5% year over year. The company also reported a GAAP operating margin of 14.9% and a non-GAAP operating margin of 39.3% for the same period.

The company also highlighted its third-quarter operating cash flow, which was USD $493.2 million, up substantially (67.0%) from the previous year. Additionally, the number of customers contributing more than USD $100,000 in trailing 12-month revenue increased 13.5% year over year, underpinning Zoom's growth trajectory.

Zoom's CEO, Eric S. Yuan, noted that the Q3 results exceeded guidance, improving their all-in-one intelligent collaborative platform with advanced new features like Zoom AI Companion. "Our strong performance across several metrics has enabled us to increase our full-year outlook for revenue and non-GAAP profitability, as well as for free cash flow, which we now expect to be in the range of USD $1.34 billion to USD $1.35 billion, up approximately 13% year over year," Yuan said.

Furthermore, regarding customer metrics, Zoom added approximately 219,700 new Enterprise customers, an increase of 5.0% from the same quarter last fiscal year. From these customers, a net dollar expansion rate of 105% was seen. Additionally, 3,731 customers contributed more than USD $100,000 in trailing 12 months revenue, marking an increase of approximately 13.5% from the same quarter last fiscal year.

The online average monthly churn index improved to 3.0%, a decrease of 10 basis points from the same quarter last fiscal year. The share of total Online Monthly Recurring Revenue (MRR) from Online customers with a continual term of service of at least 16 months was 73.2%, up 250 basis points year over year.

In terms of projections, Zoom has provided financial guidance for its fourth quarter and the full fiscal year 2024. For the fourth quarter, total revenue is anticipated to be between USD $1.125 billion and USD $1.130 billion. Non-GAAP operating income is expected to fall between USD $409.0 million and USD $414.0 million.

For the entire fiscal year 2024, Zoom expects total revenue to be between USD $4.506 billion and USD $4.511 billion. Full fiscal year non-GAAP income from operations is projected to be in the range of USD $1.740 billion to USD $1.745 billion.