Zoom Video Communications (NASDAQ:ZM) boosted its annual earnings guidance after delivering stronger quarterly revenue and profit, supported by continued expansion in its enterprise segment and disciplined cost management.
The stock climbed roughly 3% in U.S. premarket trading on Tuesday.
During its fiscal third quarter, Zoom reported adjusted earnings of $1.52 per share, surpassing analyst expectations of $1.44. Revenue increased 4.4% to $1.23 billion, ahead of the $1.21 billion consensus. Enterprise revenue grew 6.1% to $741.4 million, while online sales edged up 2%.
The company also posted a 30% jump in operating cash flow to $629.3 million, resulting in a 51.2% margin. Free cash flow reached $614.3 million. Unadjusted net income surged to $612.9 million, more than triple last year’s figure, helped by improved operating performance and reduced expenses.
Zoom said the number of customers generating more than $100,000 in trailing-12-month revenue rose 9.2% to 4,363. Online monthly churn remained steady at 2.7%.
“[T]he company points out reduction in churn, less discounting, added wins as a reason for excitement,” analysts at Bernstein wrote.
The company upgraded its full-year adjusted earnings forecast to a range of $5.95 to $5.97 per share — higher than both its previous outlook and the $5.87 analysts had expected. Full-year revenue is now projected between $4.852 billion and $4.857 billion.
For the fourth quarter, Zoom anticipates revenue of $1.230 billion to $1.235 billion and adjusted earnings of $1.48 to $1.49 per share.
The company repurchased 5.1 million shares in the quarter and expanded its buyback authorization by $1 billion, on top of the $310.4 million remaining as of October 31. Cash and marketable securities totaled $7.9 billion at quarter-end.
“Along with this operating margin focus, reinvesting this cash in share repurchases continues to be a priority to manage dilution,” the Bernstein analysts added.