Zoom Jumps After Annual Revenue Forecast Tops Estimates

Zoom Video Communications Inc. reported quarterly sales and profit that far exceeded analysts’ estimates and raised its forecasts for the rest of the year, signaling the company is confident that businesses and consumers will continue to flock to the video-meeting service. Shares gained in extended trading.

Revenue jumped more than four times to $663.5 million in the fiscal second quarter from a year earlier, the San Jose, California-based company said Monday in a statement. Analysts, on average, projected $500 million, according to data compiled by Bloomberg. Earnings, excluding some items, were 92 cents a share, compared with analysts’ estimates of 45 cents.

Zoom said sales will be as much as $2.39 billion and adjusted profit will be $2.40 to $2.47 a share in the fiscal year ending in January. Analysts, on average, expected revenue of $1.81 billion and profit of $1.25. The company had previously projected fiscal-year revenue of as much as $1.8 billion.

Zoom has emerged as one of the clearest corporate beneficiaries of the Covid-19 pandemic, which has forced millions of people to remain home to prevent the spread of the virus. Workers, students and families count on the service to keep them connected to colleagues, teachers and loved ones. Chief Executive Officer Eric Yuan has tried to multiply the company’s good fortune by bringing complementary products to market, including an expanded phone service and dedicated monitors to slot into a home office.

“I’m at a loss for words,” said Rishi Jaluria, an analyst at D.A. Davidson who is bullish on the stock. “After Q1, my colleagues and I said this is one of the best quarters in software history. How do you follow this up? I think they’ve done it. Outside of the massive acceleration in growth, the biggest positive surprise is how much profitability is going to the bottom line.”

Shares rose more than 9% in extended trading after closing Monday at a record $325.10 in New York. The stock has increased more than fourfold this year.

“Organizations are shifting from addressing their immediate business continuity needs to supporting a future of working anywhere, learning anywhere, and connecting anywhere on Zoom’s video-first platform,” Yuan said in the statement.

Zoom now has 370,200 business customers with more than 10 employees, a more than fivefold surge from a year earlier. There are now 988 clients spending more than $100,000 on Zoom services, more than double the figure from a year ago.

The software maker has also made international growth a priority, bolstering operations in India to gain more users in the world’s second most-populous nation.

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