Zoom Releases Second-Quarter Earnings That Outpace Analysts’ Predictions

For the second quarter, Zoom Video Communications reported $1.16 billion in total sales, an increase of 2.1%. Earnings came in at $1.39 per share, crushing the $1.22 expected by analysts.

“In Q2, we outperformed our guidance across the board and grew operating cash flow and free cash flow by 33.7% and 26.2% year over year, respectively, demonstrating our continued commitment to efficient growth,” said Zoom CEO Eric S. Yuan.

For the current quarter, which ends in October, Zoom predicts revenue will fall between $1.160 billion and $1.165 billion. For projected earnings per share, the company expects $1.29-$1.31.

While the Q2 figures look promising, Zoom has been unable to effectively attract small business customers, which turn a considerably higher profit than larger corporate customers. In the second quarter, the company reported an average monthly churn rate of 2.9% in the small business segment versus 3.2% in the first quarter, according to Bloomberg.

While investors are seemingly uncomfortable with the churn rate, Yuan noted that it was the lowest the company has ever had and not a big concern. Sales in the small business category were $479.7 million, which was about the same as last year.

Meanwhile, Zoom has been working on new services, like a contact center and phone systems, to bring in enterprise customers. Zoom had about 191,600 enterprise customers in the second quarter, with 3,933 paying more than $100,000 in trailing 12-month revenue. Increasing 3.5%, the California-based company pulled in $682.8 million in enterprise revenue.

New innovations have helped Zoom expand beyond just videoconferencing software, helping it to retain both large and small customers. Jumping into the AI race, the company introduced Zoom AI Companion last September. With approximately 1.2 million customers using the assistant, Zoom AI Companion is able to compose chat messages and even divide recorded meetings into smaller segments that can be reviewed and shared among users.

At the beginning of the year, Zoom’s visionOS app became available on Apple’s Vision Pro VR headset. The app allows users to create a virtual avatar of themselves to use in meetings as well as project a window that floats in a user’s physical environment.