Zoom revenue triples in Q1 but growth could slow down as more businesses return to workspaces during the year
Popular video conferencing platform, Zoom has reported a whopping $956.2 million in revenue for the quarter ended April 30, 2021. The revenue generated exceeded the $906.0 million expected by analysts at Refinitiv.
It also represents a sales growth of 191%, almost triple the $328.2 million revenue generated during the same period last year.
According to the Company’s founder and CEO, Eric S. Yuan, its huge growth was driven by its commitment to empowering customers to work and learn from anywhere with its expansive, innovative, and frictionless video communications platform.
However, a tech analyst who spoke with Technext expressed that growth was also likely on the strength that more businesses are adopting a kind of virtual workspace due to herd mentality. He argued that no one wants to be left behind the adoption of remote tools.
His analysis appears to hold some basis as Zoom competitor, Google Meet reported similar growth during the first quarter.
Zoom also announced enhancements to its Zoom Rooms offering for meeting locations and Zoom Phone product during the quarter. They include cloud-based phone services along with video calls and other capabilities. Zoom meetings also have up to 1.5 million seats at the end of April, up from 1 million in January.
Zoom recently announced an $100 million venture-capital fund.
$227.4 million in net income
Zoom’s huge growth in Revenue translated to higher than expected profits for the company.
The video company attributed a generally accepted accounting principle (GAAP) net income of about $227.4 million for the quarter. This is a $200 million increase from the GAAP net income of $27.0 million in the first quarter of last year.
Similarly, the earnings per share in adjusted profit during the four-month period rose from $0.09 per share to $0.74 per share.
The income from incoming operations boosted to $226.3 million compared to the $23.4 million and $1.6 million generated during the same quarter of the 2020 and 2021 fiscal year respectively.
The non-GAAP net income was also higher at $402.1 million, after adjusting for stock-based compensation expense related payroll taxes, and expenses related to charitable donations.
About 500,000 customers
Following the increased adoption of remote work, the Zoom customer base continues to rise exponentially. The company now has approximately 497,000 customers with more than 10 employees.
This is a whopping 87% increase from the 265,400 customers in the same quarter last fiscal year. However, its growth was smaller than the 354% recorded during the thick of the pandemic.
According to the report, new customers and the expansion of new products across existing customers were also significant drivers of revenue.
Zoom highlighted that 1,999 customers of its total customers contributed more than $100,000 in revenue in the last 12 months.
Looking forward, Eric says Zoom is expecting higher revenue of between $3.975 billion to $3.990 billion for the full fiscal year. Non-GAAP income from operations is expected to be between $1.425 billion and $1.440 billion, while EPS is expected to be between $4.56 and $4.61.
Analysts polled by Refinitiv are looking at $3.76 in adjusted earnings per share and $3.8 billion in revenue.
Despite the huge growth in Q1, the company is expecting a slower second quarter. It is looking at a slightly higher revenue of between $985.0 million and $990.0 million.
This is because the company expects the accelerated adoption across the globe to slow down as COVID-19 vaccination spreads and more business decide to reopen workspaces.
However, if the growing trend is anything to go by, a return to the office may not significantly affect the growth of video conferencing platforms as most businesses are now adopting a hybrid work life.
That said, it is possible that most businesses willing to pay for upgraded video conferencing products already have over the past year, so paid consumers may not increase significantly.
* Zoom is currently in its 2022 financial year
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