(Reuters) – Zoom Video Communications Inc (ZM.O) nearly doubled its expectations for annual sales on Tuesday, driven by a surge in users as more people use its online tools to work from home and connect with friends during coronavirus-driven lockdowns.
FILE PHOTO: Small toy figures are seen in front of diplayed Zoom logo in this illustration taken March 19, 2020. REUTERS/Dado Ruvic/Illustration
Shares of the San Jose, California-based company rose nearly 5% in extended trading after Zoom’s revenue and profit for the first quarter also beat estimates by a wide margin.
The company, which has transformed itself from a business-oriented teleconferencing tool to a global video hangout during the pandemic, had come under fire over privacy and security issues, prompting it to roll out major upgrades to its platform.
However, the latest quarterly report shows the issue had little impact on its numbers. The company said it now has about 265,400 customers with more than 10 employees, a near four-fold increase from a year earlier.
The company competes with Cisco’s (CSCO.O) Webex, Microsoft (MSFT.O) Teams and Google’s (GOOGL.O) Meet platform for paying customers, particularly enterprises, while fueling its daily user numbers by offering a free version of its app to consumers.
Zoom reported revenue of $328.2 million, beating analysts’ estimates of $202.7 million, according to IBES data from Refinitiv.
While Zoom’s revenue increased sharply, its costs rose even more steeply, squeezing its gross margins. The company’s cost of revenue was up 330% to $103.7 million, which lowered its gross margin to 68.4% from 80.2% a year earlier.
Excluding items, the company earned 20 cents per share in the latest quarter, beating analysts’ estimate of 9 cents per share.
The company raised its full-year revenue forecast to a range of $1.78 billion to $1.80 billion from $905.0 million to $915.0 million estimated previously. Analysts on average expected revenue of $935.2 million.
Zoom’s shares have more than tripled this year.
Reporting by Ayanti Bera in Bengaluru and Stephen Nellis in San Francisco; Editing by Amy Caren Daniel and Anil D’Silva