Zoom blows past Wall Street estimates in the fiscal third quarter

Zoom blows past Wall Street estimates in the fiscal third quarter
Written by:
Wajeeh Khan
November 30, 2020
  • Zoom blows past Wall Street estimates in the fiscal third quarter.
  • The video communications firm raised its annual guidance for revenue.
  • Zoom is currently close to 600% up year to date in the stock market.

Zoom Video Communications Inc. (NASDAQ: ZM) published its financial results for the fiscal third quarter on Monday that came in better than what analysts had anticipated. The company attributed its hawkish performance primarily to its videoconferencing software that continues to be in demand amidst the COVID-19 crisis that has fuelled a trend to work from home this year.

Shares of Zoom slid roughly 4% in extended trading on Monday. On a year to date basis, Zoom Video Communications Inc. is now close to 600% in the stock market. Compared to its year to date high in mid-October, Zoom shares that you can learn to buy online here are now trading more than 15% down.

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Zoom’s Q3 financial results versus analysts’ estimates

Zoom said that its revenue printed at £583.41 million in the third quarter that represents a 367% growth versus £125.06 million that it had reported in the same quarter last year. According to FactSet, experts had forecast the company to record a lower £520.95 million of revenue in the recent quarter. The American company enhanced security earlier in November as part of proposed U.S. settlement with FTC.

The communications technology company posted £148.93 million of net income on Monday. On an adjusted basis, Zoom earned 74.31 pence of earnings per share in Q3 as compared to 6.76 pence per share in the same quarter last year. FactSet Consensus for per-share earnings stood at 57.05 pence.  

For the fiscal fourth quarter, Zoom forecasts its revenue to grow by 288% and in the following quarter by 116%. The company expects Q4 to be the first quarter when its revenue will top £600 million. In comparison, its revenue was capped at a much lower £150 million a year ago.

Zoom raises its full-year guidance for revenue

The San Jose-based company also raised its guidance for full-year revenue on Monday to £1.94 billion. In the prior quarter (Q2), Zoom had registered an over 300% growth in sales, as per the report published in the last week of August.

According to CEO Eric Yuan:

“We expect to strengthen our market position as we finish the fiscal year with an increased total revenue outlook of approximately £1.93 billion to £1.94 billion for fiscal 2021, or approximately 314% increase year over year.”

At the time of writing, Zoom is valued at £102 billion and has a price to earnings ratio of 610.75.